Peak Season Is Here, and Your 2027 Parcel Costs Are Already Being Set

UPS 5.9% average increase takes effect December 21, 2026 - the week of Christmas – and FedEx follows with 5.9% on January 4, 2027 – its fourth straight year at that number. With FedEx demand surcharges running through January 17, shippers will pay new base rates and peak surcharges on the same packages for several weeks, leaving little to no time to prepare.

What shippers should plan around

Both carriers’ demand surcharges fall hardest on shippers with big peak volume spikes, heavy residential delivery or packages that already trigger Additional Handling or Large Package surcharges. For them, the holiday weeks are the most expensive of the year

UPS’s preview rates, posted at the end of October, show how uneven the increase is. Ground rates rise an average of 5.67%, with the lightest packages and minimum charges going up faster. Outside of Large Package, nearly every common accessorial climbs 8.5% to 9.4%, and the commercial Large Package Surcharge itself rises as much as 15.4%, depending on zone. UPS is also updating its Delivery Area and Remote Area Surcharge ZIP lists and zone assignments, raising the minimum billable weight on Additional Handling packages from 40 to 50 pounds and, for qualified customers, adding a per-package surge fee on Ground and Ground Saver shipments from certain origin ZIP codes.

UPS and FedEx also keep changing their fuel surcharge table, so the surcharge is rising faster than the diesel and jet fuel prices it’s tied to. UPS’s latest table change took effect on November 2 and FedEx’s latest table change takes effect on November 9..

Earlier this year, Chief Strategy Officer Matt Huckeba explained why the headline increase rarely matches what shippers pay. Once demand, area, handling and fuel charges are counted, most shippers will pay well over 5.9%.

That gap keeps widening because carriers have moved more of their pricing into accessorials, surcharge rules and fuel tables. The GRI is the number shippers budget for and benchmark against, while the rest gets far less scrutiny and compounds on every invoice. Shippers who negotiate only the base rate are negotiating the smallest part of their increase. How much of the rest you absorb depends on what’s already in your agreement.

Where you should be right now

By this time of year, shippers should have negotiated relief on demand surcharges and a base agreement that protects them from the full year-over-year increase through GRI caps, accessorial discounts or minimum net charge adjustments. If you haven’t, there’s still time to recover some ground before January.

Start by checking which of those protections your agreement includes, since anything it doesn’t cover will be billed at the full published increase. Following this, you should re-rate your last 12 months of shipments against the 2027 preview rates, including the ZIP list and zone changes, to see what 2027 will cost you.

Something you can also do is right-size cartons to lower dimensional weight and keep packages under Additional Handling thresholds. Through this, you’ll be able to save without the need for carrier approval. Economy services such as UPS Ground Saver or FedEx Ground Economy can handle orders that aren’t time-sensitive for less. Regional carriers are often cheaper in the areas they cover, too.

Because much carrier pricing now changes outside the annual GRI, a once-a-year contract review can’t keep pace. Shippers without the data or time to track it should have a partner benchmarking their agreements and negotiating on their behalf year-round.

The bottom line: Rate increases and peak surcharges come every year, but they now land closer together than they used to. Planning early gives you more room to respond.

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