Parcel shipping rates surged in the fourth quarter of 2025 due to extra fees, according to a report by AFS Logistics and TD Cowen. Ground parcel rates were 34% above the 2018 baseline during peak season, driven by increased volumes and surcharges. Carriers introduced demand surcharges despite modest demand growth.

Residential shipments and increased surcharges led to higher shipping costs, with FedEx and UPS implementing blanket demand surcharges. Carriers are shifting to surcharges to make up for slower revenue growth and may risk losing retailers to cheaper carriers. Fuel surcharges increased despite a decline in diesel prices.

Ground parcel rates are expected to rise in 2026 due to general rate increases and changes in package dimensions logic. FedEx and UPS implemented a 5.9% GRI for the year, with rates and fees closely aligned. The TD Cowen/AFS Freight Index is projected to increase by 38.9% in the first quarter.

Express parcel rates also rose in the fourth quarter due to higher average billed weight and increased residential deliveries. Carriers have enforced a 40-pound minimum billable weight for certain surcharges. Express rates are expected to increase by 7.6% above the 2018 baseline.

The TD Cowen/AFS Freight Index compiles data from over 1,800 clients spending $39 billion annually on transportation. Record-high rates are concerning for shippers, but discounts may still be available. Carriers are willing to make concessions to secure valuable volume.

Read more at Yahoo Finance: Proliferation of parcel delivery surcharges drives up shipping rates