# FedEx and UPS Are Changing the Game for E-Commerce Shipping **Author:** Robert Parr **Date:** 2026-04-21 **Description:** Legacy carriers are losing money on small e-commerce parcels and shifting strategy. Here's what that means for brands relying on 3PL fulfillment partners. **URL:** https://thrive3pl.com/blog/fedex-ups-ecommerce-food-chain --- > **TL;DR:** FedEx and UPS built their networks for heavy B2B freight, but 70% of parcels are now lightweight B2C shipments. Both carriers are raising rates, adding surcharges, and chasing higher-margin services to compensate -- and brands are absorbing the cost. Working with a carrier-agnostic 3PL that actively manages rate negotiations and shifts volume between carriers is one of the most effective ways to protect your margins as this transition unfolds. The parcel shipping industry is going through a structural shift that most e-commerce brands have not fully internalized. FedEx and UPS -- the two carriers that built modern package delivery in America -- are losing money on a significant portion of the e-commerce volume they carry. Their response is reshaping how shipping costs, service levels, and carrier relationships work for every brand that depends on parcel delivery. I think it is worth understanding what is happening and why, because the decisions these carriers make over the next two to three years will directly affect your fulfillment costs, your delivery timelines, and your ability to compete. ## The Economics Have Flipped In 1985, roughly 90% of parcel shipments in the United States were business-to-business. Heavy boxes moving between companies, warehouses, and retail stores. The FedEx and UPS networks -- the trucks, the hubs, the sorting facilities, the driver routes -- were designed and optimized for that type of freight. Today, the numbers have reversed. B2C shipments now represent approximately 70% of parcel volume in the U.S., according to ShipMatrix founder Satish Jindel. The typical e-commerce package is lighter, smaller, and lower-value than the B2B freight these networks were built to carry. A 2-pound poly mailer going to a residential address generates a fraction of the revenue that a 40-pound carton going to a commercial dock once did -- but it requires the same last-mile delivery infrastructure. The last mile is the most expensive segment of the delivery chain. Residential stops are slower, less dense, and more prone to redelivery attempts than commercial deliveries. When 70% of your volume is low-revenue residential parcels, the math stops working. ## How the Carriers Are Responding FedEx and UPS are not sitting still. They are actively restructuring their businesses to deal with this reality, and the changes are already showing up in how brands experience shipping. ### Rate Increases and Surcharge Complexity Annual General Rate Increases (GRIs) from both carriers have consistently exceeded 5% in recent years. But the headline GRI is only part of the picture. The real cost pressure comes from surcharges -- residential delivery surcharges, peak season surcharges, oversized package fees, address correction fees, and fuel surcharges that fluctuate weekly. These accessorial charges have become a meaningful percentage of total shipping cost for many e-commerce brands. If you are shipping lightweight DTC orders, I think it is fair to say that your effective rate increase in any given year is often double the published GRI when you factor in surcharge adjustments. ### Moving "Up the Food Chain" Both carriers are pursuing a deliberate strategy to capture higher-margin business. Jindel describes it as needing to "move up the e-commerce food chain" -- shifting from basic parcel delivery toward integrated logistics services, fulfillment solutions, and supply chain management. FedEx invested $3.4 billion in InPost, a European courier with locker networks that reduce the cost of last-mile delivery. UPS acquired Roadie, a same-day delivery platform, for $586 million. Both companies are building out fulfillment-as-a-service offerings designed to compete with Amazon's FBA model. The goal is clear: stop being a commodity carrier that moves boxes for $5 and become a logistics partner that captures $50 of value per order through warehousing, fulfillment, and technology services. ### Selective Volume Here is the part that matters most for brands: FedEx and UPS are becoming more selective about which e-commerce volume they want. High-volume shippers with predictable, profitable freight still get competitive rates. Small and mid-sized brands with lightweight, low-revenue packages are increasingly seeing rate structures that are -- to put it diplomatically -- less accommodating. This is not a temporary adjustment. It is a structural repositioning of where these carriers want to sit in the supply chain. ## What Amazon's Rise Tells Us Amazon Logistics delivered more parcels last year than any individual legacy carrier. Amazon built its own delivery network precisely because it understood the economics of lightweight e-commerce parcels better than anyone -- and it decided the margin structure of outsourcing to FedEx and UPS was unsustainable at scale. Had FedEx invested $1 billion in Shopify a decade ago instead of $4.8 billion acquiring TNT Express, that stake would be worth approximately $50 billion today. The point is not to second-guess past decisions. It is to recognize that the carriers who will thrive in e-commerce are the ones who move upstream -- who control or influence the commerce itself, not just the delivery. Amazon did this. FedEx and UPS are trying to catch up. For brands that are not Amazon-sized, the implication is straightforward: relying on a single carrier relationship -- especially one that is actively deprioritizing your type of volume -- is a strategic risk. ## Why This Matters for Your 3PL Relationship If you are working with a [3PL fulfillment partner](/blog/what-is-a-3pl-company-complete-guide), the carrier landscape directly affects your shipping costs, your delivery speed, and your customers' experience. I think this is an area where a lot of brands underestimate the value their 3PL should be providing. ### Rate Negotiation A 3PL that ships across hundreds of accounts has aggregate volume that individual brands cannot match. That volume gives you real negotiating power with carriers. When FedEx raises rates by 6%, a good 3PL is already in conversations about contract adjustments, discount tiers, and surcharge caps. If your 3PL is not actively managing carrier negotiations on your behalf, you are paying more than you should be. This is one of the most direct ways a 3PL affects [your total fulfillment cost](/blog/how-much-does-a-3pl-cost) -- and it is often invisible to brands that only look at per-order pick-and-pack fees. ### Carrier Diversification The most important thing a 3PL can do in this environment is maintain active relationships with multiple carriers and shift volume based on rate and performance. If UPS implements a surcharge that disproportionately affects your package profile, your 3PL should be able to move that volume to FedEx, USPS, DHL eCommerce, or a regional carrier within days -- not months. At Thrive, we ship across all major carriers and actively monitor rate competitiveness at the zone, weight, and service level. When one carrier's pricing moves against a client's package profile, we adjust. That flexibility is not a nice-to-have. In a market where carriers are restructuring their businesses around profitability, it is essential. ### Service Level Monitoring Carrier strategy shifts do not only affect pricing. They affect service quality. When a carrier deprioritizes certain types of volume, delivery times can slip, scan compliance can decline, and claims resolution can slow down. A 3PL that is paying attention catches these trends early and adjusts routing before your customers start complaining about late deliveries. ## What to Ask Your 3PL If you are [evaluating a 3PL](/blog/how-to-choose-a-3pl-20-point-evaluation-framework) or reviewing your current partnership, I think these questions are worth asking in the context of carrier management: - **Which carriers do you ship with, and what percentage of volume goes to each?** A 3PL that sends 95% of volume through a single carrier is not managing carrier risk. You want diversification. - **How often do you renegotiate carrier contracts?** Annual renegotiation is the minimum. Quarterly reviews of surcharge structures and accessorial fees are better. - **Do you pass through carrier rates or mark up?** Transparency here matters. Some 3PLs mark up carrier rates as a revenue stream. Others pass through negotiated rates and charge for the service separately. Neither model is inherently wrong, but you should know which one you are on. - **When was the last time you moved volume between carriers for a client?** If the answer is "never" or "we don't do that," I think that tells you something about how actively they are managing this on your behalf. - **How do you handle peak season surcharges?** Carriers impose seasonal surcharges that can add $1 to $5 per package during high-volume periods. Your 3PL should be communicating these proactively and, where possible, negotiating caps. ## The Bottom Line FedEx and UPS are not going away. They remain two of the most capable logistics networks on the planet, and they will continue to carry a significant portion of U.S. e-commerce volume. But the terms on which they carry that volume are changing -- and changing in ways that favor large, profitable shippers over small and mid-sized brands. The carriers are making a rational business decision. Basic parcel delivery at commodity rates is not sustainable for networks designed around B2B freight. Moving up the food chain -- toward integrated logistics, higher-margin services, and more selective volume -- is the correct strategic response. For brands, the correct response is equally clear: do not manage carrier relationships alone, do not rely on a single carrier, and make sure your [fulfillment partner](/blog/what-is-a-3pl-company-complete-guide) is actively navigating this landscape on your behalf. The brands that treat shipping as a line item to minimize will continue to absorb rate increases passively. The brands that treat carrier management as a strategic function -- usually through a 3PL with the volume, relationships, and systems to do it well -- will maintain a meaningful cost advantage. The parcel industry is restructuring. Your shipping strategy should be restructuring with it. Robert --- *Published by Thrive 3PL — Houston-based fulfillment for e-commerce brands. Learn more at [thrive3pl.com](https://thrive3pl.com).*