According to a report released on 20/1, after two stagnant quarters, discount programs for UPS and FedEx delivery customers became more active in Q4/2025. The increased incentives applied to both ground and express delivery services.
Specifically, ground delivery discounts primarily benefited small and medium-sized customers, while express delivery incentives focused on large enterprises. However, the increased discounts were not enough to curb escalating shipping costs during the peak year-end season.
Ground delivery rates per package in Q4 were 34,1% higher than the index's 1/2018 baseline, primarily due to peak season surcharges and residential delivery surcharges. Meanwhile, express delivery rates rose 5% above the baseline.
According to the TD Cowen/AFS Freight Index, shipping costs are expected to continue rising in Q1/2026 as annual price adjustments from major carriers take effect, adding financial pressure on businesses amidst already expensive delivery services.
Despite this, experts believe customers still have room to negotiate with UPS and FedEx. Mingshu Bates, Director of Analytics and President of Parcel Shipping at AFS Logistics, stated that the upward trend in discounts returned in late 2025 after two flat quarters.
"This does not mean the market is returning to the more relaxed state of a few years ago, but it indicates carriers are willing to concede to retain strategically valuable freight sources," Bates noted.
According to Bates, average express delivery discounts increased by 0,7 percentage points from Q3 to Q4, while ground delivery discounts rose by 0,3 percentage points.
Increased discounting reflects UPS and FedEx's strategy to attract small and medium-sized businesses (SMBs), particularly in ground delivery. This customer segment often yields higher profit margins per package compared to large customers.
During recent earnings calls, leaders from both companies noted positive growth from this segment. UPS Chief Executive Officer Carol Tome stated that in Q3/2025, UPS "increased market share in both volume and value" within the SMB customer group. FedEx also reported a strong quarter for business orders and small customers.
"This was the best quarter for SMB market share and performance I have seen in many years," stated Brie Carere, Executive Vice President and Chief Customer Officer at FedEx, in 12/2025.
According to Kenneth Moyer, Partner and Supply Chain Director at LJM Group, discounts are a direct and effective tool for carriers to gain market share, both with small businesses and large customers. As rates and surcharges continue to rise, customers are willing to shift volume to another carrier in exchange for a discount, even if it is not substantial.
"Previously, few were willing to switch carriers for a mere 5-6% saving. But now, that amount is significant enough for many businesses to consider," Moyer said.
Anh Duong (according to Supply Chain Dive)
