Getting materials, tools, and parts delivered on time is critical to keeping your commercial projects on schedule and budgets in check. Ground shipping costs at FedEx and UPS have reached record highs, meaning you may need to adjust how you plan deliveries and manage costs.
Record High Ground Delivery Rates
According to the TD Cowen/AFS Freight Index, ground delivery rates jumped 32% in the second quarter of 2025 compared to January 2018. That’s up from 26.2% in the same quarter last year and higher than expected. Rates are forecast to stay about 29% above last year’s levels through the third quarter.
Why Are Costs Rising?
FedEx and UPS have increased surcharges, especially fuel fees, to boost profits on the volume they keep. Fuel surcharges rose 5.1% in Q2 2025, even though diesel prices dropped nearly 2%. This means carriers are using surcharges as a revenue stream, not just trying to recover costs.
UPS is pushing harder on surcharges, especially with upcoming changes to the Additional Handling fee that could significantly increase costs for shippers. The Index notes that while FedEx hasn’t yet matched these moves, system constraints may lead them to follow UPS’s lead in the near future.
At the same time, discounts that once helped lower costs are being phased out, giving carriers more pricing power. This shift has many shippers turning to less expensive options like FedEx Ground Economy, UPS Ground Saver, and the U.S. Postal Service.
According to Mingshu Bates, chief analytics officer at AFS and president of parcel, the frustration is real. “[Shippers] are just fed up with all the fees and the incremental changes that the carriers are bringing to the market, so they are absolutely actively seeking alternatives,” she said.
Express Shipments Also Feeling Pressure
It’s not just ground shipping. Express parcel rates are rising too. The index projects express rates will increase 2.3% in Q3 2025 compared to last year, up from 0.7% in Q3 2024, driven by ongoing fuel surcharge hikes.
How This Affects Your Deliveries
You’re likely already seeing some shipments shifted to slower, cheaper ground economy services like FedEx Ground Economy or UPS Ground Saver. While these save money, they come with longer transit times that can throw off your project schedules.
When shipments take longer than expected, it can cause delays on the jobsite. Materials arriving late mean crews waiting around instead of working. Delays cascade. If one task can’t start on time, it can push back the whole schedule, risking costly overtime or penalty clauses.
What You Can Do
- Factor rising shipping costs into bids and project budgets.
- Use slower ground economy options for deliveries that aren’t time-critical to save money.
- Consolidate shipments where possible to reduce multiple fees.
- Stay alert for new fees like UPS’s upcoming Additional Handling surcharge and budget accordingly.
- Talk to suppliers early about shipping options and costs so you can plan better.
- Communicate with clients if delivery delays affect project timing.
Ground delivery costs and express rates will stay high for the foreseeable future. Carriers are raising fees and cutting discounts, pushing more freight to slower, cheaper services. Contractors who plan delivery timelines carefully, adjust shipping strategies, and stay on top of carrier fee changes will keep projects moving and protect profits.
