2025 Parcel Express Roundtable: Shippers navigate flat growth and price pressures

In this time of renewed economic uncertainty, the parcel, express, and last-mile delivery markets continue to adapt and evolve.

Just five years ago, these sectors were surging—fueled by a pandemic-era spike in consumer spending on goods. But that surge gave way to a shift toward services, which cooled parcel volumes and forced carriers to adjust. In response, carriers implemented aggressive pricing strategies and a range of cost-cutting initiatives, all while navigating ongoing inflation and high interest rates.

Despite these headwinds, shippers still find themselves in a strong negotiating position—though that leverage could erode quickly in the face of shifting global trade dynamics, including new tariff actions from the White House.

To help shippers stay informed in this ever-changing market, Logistics Management brings together three of the industry’s top analysts for our annual Parcel Express Roundtable. This year’s panel features Rick Watson, founder and CEO of New York-based RMW Commerce Consulting; John Haber, chief strategy officer at Transportation Insight; and Paul Yaussy, senior director of parcel consulting at Shipware.

Logistics Management (LM): How would you describe the current state of today’s parcel marketplace?

Paul Yaussy: This year is a continuation of the parcel market trends we saw in 2024. It’s still a good time to be a shipper, especially if you’re growing. We see shippers maintaining leverage with the carriers because the overall market is still showing flat to minimal growth. The carriers are seeking volume because volume allows them to optimize their network and reduce variable cost. 

Carriers are battling over stagnant volume, and their easiest path to winning is to compete on price. Discounts that were reserved for enterprise-sized shippers are bleeding down to shippers of all sizes—although some of that is due to how much the carriers have raised their surcharge rates. For example, fuel discounts are becoming more common, partly to compete on price and partly due to the carriers raising their fuel surcharge more than seven times in the last 18 months.

In this stagnant growth period, the legacy carriers are competing with regionals on price, and, so far, the options for shippers have not dwindled. Regionals are performing well and expanding their reach, providing additional choices for those seeking carrier diversification.

John Haber: The current parcel marketplace is going through significant change in 2025. We started out 2025 with a surprising announcement from the USPS and UPS, that the USPS will no longer be providing last-mile parcel delivery for UPS. This has had a huge impact on the UPS SurePost product, as SurePost has been renamed UPS Ground Saver. 

It will be interesting to see how peak season is managed by Ground Saver shippers, as operating plan requirements [volume needs to be segregated separately from other Ground service levels] and time-in-transit levels [volume will not be given priority and packages may take longer to reach the end customers] will be more challenging for most shippers. 

Both the USPS and FedEx also continue to make significant changes to their parcel networks as well as to their product offerings and pricing structures. Postal Consolidators have faced considerable challenges in 2025, due to USPS parcel ounce-based pricing increases and policies, as well as operational modifications due to USPS DDU (destination delivery unit) shipment injection requirements.  Regional carriers continue to grow market share and enhance service coverage and territories.

The USPS is in a period of great transition in 2025. The Postmaster General, Louis DeJoy, officially resigned at the end of March, and the DOGE team is both making and recommending significant reductions to key areas such as staffing, contracts, real estate leases, and facilities. The privatization of the USPS is one of the most controversial topics being discussed in 2025. 

However, the most significant areas making an impact on the 2025 parcel marketplace are the widespread tariffs being implemented by countries across the globe as well as the U.S. de minimis changes for China, Hong Kong, and Macau.  We anticipate significant reductions to global parcel volumes moving forward this year in many key industries as a result.

Rick Watson: Smart shippers have realized that to save money in this market, they have to have a multi-carrier strategy based on lanes and areas of the country in North America—it's the only way to optimize rates.

UPS and FedEx are not going to cut you any special deals—they would rather let business go than chase business that does not meet their margin profile. And what CFO believes in their forecast enough to hit their rate tiers?

LM: Can you describe the current rate and pricing environment?

Haber: The rate and pricing environment continues to change more dynamically and frequently, in part due to improvements in technology, especially the integration of AI by many carriers. Surcharges are a lever that carriers are heavily utilizing to improve revenue yields—especially with package volume growth a major issue for most carriers.

In general, at a macro-level, the current rate and pricing environment is more favorable for shippers than carriers. This is being driven by supply exceeding demand, leading to excess capacity in many parcel networks. Carriers are utilizing dynamic pricing and surcharges to maintain yields.

Watson: I would say that there’s not much wiggle room for shippers. There’s continued growth in rates to offset rising costs on the carrier side, and a continued concerted push towards higher margin business.

If you’re a shipper without leverage, which mostly means that your product is not close to your customers, then you’re in trouble because you’re too reliant on a single end-to-end carrier, which means you have no control over your supply chain costs.

Yaussy: Base rates continue to rise at rates higher than the rate of inflation, as most carriers [FedEx/UPS and regionals] implemented another year of 5.9% or higher base increases. Furthermore, surcharges continue to rise at an even higher clip as most shippers saw their overall spend increase in the range of 7% to 9% in 2025 compared to 2024. 

Shippers utilizing postal consolidators [UPS SurePost, UPS Mail Innovations] took on huge increases this year, as the USPS announced changes to the consolidator model. Now, consolidators must induct packages much further up the USPS network, thereby losing this pricing advantage they held when they could induct at the local DDU.

What’s exacerbated the current pricing environment are the ever-increasing ways carriers are hiding price increases beyond the annual GRI. The carriers continue to make frequent changes to their fuel tables in order to maintain a higher surcharge percentage, often protecting against the cost of fuel decreasing, subsequently driving costs up for shippers.

Further examples of mid-year price increases come in the form of zonal realignments, DAS zip codes changes, new demand or surge surcharges, and the implementation of payment processing fees. These changes are not always communicated directly to the shipper and often cause difficult-to-explain parcel cost increases for shippers.

The word for the current pricing environment is ‘aggressive.’ Carriers are implementing the most extractive increases they deem possible, and they’re aggressively trying to capture the whole increase. Meanwhile, shippers have fought it by conducting more frequent, more aggressive, pricing requests.

LM: How are market conditions affecting service, and what role is the current state of the U.S. economy playing?

Watson: The volume that’s out there you don't want. And the volume that you have isn't growing. Amazon, for example, is in their own class. New e-commerce entrants like Temu, Shein, TikTok Shop offer high volume, but it’s no-margin business that no one wants. Everyone else isn’t seeing any growth. It's in this environment that you see FedEx, UPS, and DHL diversifying to higher margin business like healthcare.

Yaussy: Both big carriers are engaged in cost cutting measures. UPS calls it ‘Better, not Bigger’ or ‘Network of the Future,’ while FedEx is calling it ‘DRIVE’ or ‘Network 2.0,’ resulting in their three separate networks being combined. As we’ve talked about here, volume is either down or stagnant, driving the need for the carriers to respond by cutting costs.

For carriers, volume is king, and it allows them to optimize their networks. With it, they have options. Without it, they’re stuck and forced to cut costs, or increase incentives to retain or win business. Both UPS and FedEx have been shutting down facilities and relying more on automated facilities.

You won’t necessarily see on-time performance taking major hits, mostly because the carriers have adjusted their published transit times. Obviously with labor cuts, closed buildings, network transformations and the like, you will see some service degradation, as well as worsened customer service interactions. Don’t forget, the carriers still don’t guarantee on-time delivery for any shipments other than next-day products, 2 Day AM, and priority international.

Haber: High inflation levels and high interest rates in the U.S. continue to remain a problem for both shippers and carriers. These two factors have many carriers more focused on achieving profitability goals via cost reduction and productivity improvements rather than through volume growth. This type of environment often leads to declines in different types of service, such as customer service, on-time performance, and account management.

LM: How are the more established carriers adjusting to the ongoing influx of new, last-mile competitors?

Yaussy: First, FedEx and UPS have historically ignored the influx of new, last-mile competitors. But, over the past couple of years, we’ve seen increasing examples of FedEx and UPS reacting to regionals and other competitors. We also see FedEx and UPS losing long-standing volume to the regionals as more and more shippers look to diversify their carrier mix, mostly because the alternative carriers have proven to be viable solutions.

FedEx and UPS have responded in the past couple of years with their annual GRIs. Both have taken smaller increases on the lower zone rates while taking large increases in long zones where they don’t face competition. You often see minimum charges climbing as the zones increase now, whereas in years past the minimum would be consistent.

You see similar reactions in surcharge pricing where many surcharges are zone based and get larger as the zone gets higher. This trend will continue because, frankly, it makes sense for them to charge higher rates where they don’t face national competition.

As industry volume growth has waned, one would have expected to see many more regional carrier contractions, but we have not seen it yet. That’s likely because they’ve figured out their niche in balancing margin and meeting customer delivery expectations. We have, however, seen related final-mile solution providers go out of business [Pandion], and the expectation is more to come.

Haber: More established carriers continue to be faced with new, last-mile competitors, and many of these competitors have been taking market share. Several of the new last-mile solutions are very well-established companies with deep pockets as opposed to start-ups. 

Similar to Amazon, they have other revenue sources and have moved into last mile-delivery to deliver both their own product sales as well as third-party shipments. Crowd-sourced options are helping drive an influx of last-mile competition.

The more established carriers have been using merger and acquisition as a key focus in adjusting to the influx of competition—to acquire solutions that don’t exist in their current portfolio and help them better compete with many of the new competitors.   

Watson: Frankly, I think most are not worried about new players. The top carriers have really dialed into their ideal customer profile, and it is mostly not the customer who’s interested in building their own network from scratch.
 

LM: How do you view where Amazon is now for both parcel and last-mile services and where may it be headed next?

Haber: Amazon already delivers the most packages of any courier both globally and in the U.S. Amazon has been focused on expanding its parcel delivery offering to third-party shipments—packages that aren’t being fulfilled at an Amazon facility and currently being shipped with other couriers. Amazon will continue to move in this direction, but still has work to do to gain significant market share on this endeavor.

Watson: Amazon is going to continue to push into more and more sparsely populated areas to offer its service. In many ways, Amazon is going to become a more efficient post office than the post office.

Yaussy: When it comes to last-mile delivery services, Amazon is the undisputed giant. The company now delivers more packages than UPS and FedEx, and while it keeps its delivery performance metrics under wraps, available data suggests its on-time performance is on par with its competitors.

Amazon closely guards its strategic plans, but all signs point to the continued expansion of Amazon Shipping. We’re seeing Amazon aggressively bidding for mid-size to large shippers, where it fits their model, often presenting highly competitive proposals.\

It will likely take another four to five years before the Amazon Shipping network is fully developed. While Amazon’s delivery reach is vast, its pickup service currently operates in only 15 to 20 metropolitan areas. At present, the focus is on high-volume shippers in those markets, but expansion is steadily progressing. In time, Amazon Shipping is poised to become a formidable competitor to UPS and FedEx.

LM: Do you think the USPS has made strides as a parcel carrier in recent years, based on its 10-year strategic plan and the Postal Service Reform Act?

Yaussy: Yes, the USPS has made significant strides as a parcel carrier in recent years, driven by its 10-year Strategic Plan [Delivering for America] and the Postal Service Reform Act of 2022.

The 10-year plan focuses on improving reliability, service performance, and financial sustainability. It includes investments in modernizing the USPS network, upgrading processing facilities, and expanding parcel capacity to better compete with private carriers like UPS, FedEx, and Amazon. Service performance has improved, with more on-time deliveries and faster transit times in many areas.

The Postal Service Reform Act provided much-needed financial relief by eliminating the requirement for USPS to pre-fund retiree health benefits—one of the biggest financial burdens on the agency. This allowed USPS to reinvest in infrastructure, technology, and workforce improvements, making it more competitive in the parcel delivery space.

Shippers who’ve not employed USPS as part of their carrier portfolio remain hesitant because of service issues, perceived or real. USPS Ground Advantage, for some shippers, has proven to be significantly less expensive than economy services at FedEx and UPS.

Additionally, Postmaster DeJoy applauded the efforts of his salesforce. Traditionally, only large shippers were able to get Negotiated Service Agreements, but small- to medium-sized shippers now have leverage to negotiate with the post office. 

Haber: I’ll add a ‘yes’ as well, as the USPS has made significant progress as a parcel carrier due to these initiatives in recent years, but still faces substantial challenges, especially with the resignation of Postmaster DeJoy and the deep political divide on the future direction and structure of the USPS.

LM: How are parcel carriers and service providers viewing the need for increased investment in things such as automation, digital technology, and AI in order to drive operational throughput and productivity—as well as from a service perspective?

Yaussy: It’s hard to weed through what they’re actually doing versus what they say they’re doing as it relates to technology. However, it’s clear that there have been many advances over the last few years.

In its last earnings call, UPS said that they processed and delivered the same amount of volume in the fourth quarter using three million fewer hours. Because of such advances, UPS plans to close 10% of its buildings and cut back on its ground and air fleet. FedEx is doing similar things with its network transformation.

Investments in AI, for example, have resulted in all carriers improving route optimization that help them analyze real-time traffic and weather, as well as delivery density, to ensure the most efficient use of equipment. It can also help with predictive analytics and demand forecasting, which is helpful during peak periods not only around the holidays, but year-round.

Investments in digital technologies are enhancing things like tracking transparency and proactive issue resolution. The carriers’ websites offer more information to shippers and allow recipients more options at delivery compared to just a few years ago.

Haber: Indeed, increased investment in these areas is critical for parcel carriers and service providers. Failure to prudently invest in these areas, will make it difficult for many carriers and providers to survive over the long-term. The investments need to be well planned, well executed and accurately measured once implemented—failure in any of these three areas may lead to long-term viability challenges, rather than enhanced market positioning.

LM: How do you view the impact of tariffs on the parcel market?

Haber: In the short-term, tariffs and de minimis changes have a negative impact on the parcel market. They result in fewer parcels being shipped internationally, as well as in the domestic U.S. They also result in fewer ocean and air cargo shipments into the U.S., and this negatively impacts inventories and leads to less U.S. domestic parcel shipments. There will be increases in U.S. domestic parcel shipments in certain cases if inventory and supply can meet demand.

If the tariffs are only in place for a limited time and quickly lead to more favorable trade agreements for the U.S., then the negative impacts will be less impactful over the medium-term. If the tariffs are in place for a significant length of time, it could have a negative impact on the parcel market, in both the short-term and the medium-term.

It remains to be seen how tariffs impact the parcel market over the long-term. Theoretically, they may increase the number of U.S. domestic parcel shipments by reducing our dependency on sourcing from other countries. This is one of the core objectives of the tariffs.

Yaussy: This administration is going to, at minimum, use the threat of tariffs throughout its term. One way to counter the impact of rising costs due to tariffs is to negotiate savings on your parcel agreement.

The carriers are likely to respond with mid-term pricing increases or new surcharges to compensate for customs complexity. They will never let an opportunity to blame someone else for new surcharges pass them by.

For e-commerce, tariffs can increase product prices, shifting consumer demand toward domestic sellers, and boosting regional parcel volume. Major carriers like UPS, FedEx, and DHL are expanding customs brokerage services and optimizing distribution networks to adapt.

LM: What advice do you have for parcel shippers in 2025?

Watson: I think 2025 will be a continuation of 2024. Flexibility and cost efficiency are at a premium. And if you don't have a multi-carrier strategy, you need one. If you have not optimized your inventory placement you need to do so.

Yaussy: A year ago, I would have predicted a shift back to carriers having more leverage over shippers—but that hasn’t happened. Shippers still hold strong negotiating power, so my top advice is: Negotiate, negotiate, negotiate. You may have more leverage than you realize, especially if you have a team member who understands parcel pricing.

When negotiating, always bring alternative carriers into the conversation. If your incumbent carrier believes they have nothing to lose, they’ll negotiate accordingly. Engaging multiple carriers gives you insight into market rates, service levels, and potential cost savings, allowing you to strategically leverage competitive offers. Having options works to your advantage.

Additionally, regularly tracking key parcel KPIs is essential. Knowing your shipping data as well as—or better than—your carrier gives you a stronger position in negotiations and helps identify hidden cost increases.. Don’t rely on carriers to provide this—while they may claim 98% on-time delivery, your own data may reveal a different reality.

Peak season planning should start early. Carriers are redefining ‘peak,’ and surcharges continue to rise. Shift volume ahead when possible, monitor service guides for surcharge announcements, and diversify your carrier mix to keep costs low and service levels high.

Haber: Parcel shippers need to pay attention to market conditions on a daily basis. Impactful changes are occurring every week and at a rapid pace. Staying informed is absolutely critical, and having well developed risk management strategies and contingency plans in 2025 is essential for shippers.