UPS SurePost Rate Increase

UPS’s SurePost service, which combined UPS’s ground network with the U.S. Postal Service (USPS) for final-mile deliveries, has undergone significant changes. The contract between UPS and USPS expired on December 31, 2024, and the two companies did not reach a new agreement.

As a result, starting January 2, 2025, UPS SurePost packages addressed to P.O. Boxes, APO/FPO addresses, and locations in Alaska, Hawaii, and Puerto Rico are being rejected and returned, as USPS is the only carrier authorized to deliver to these destinations.

This abrupt change has left shippers scrambling for solutions, as no prior notice was provided.

Analysts suggest that UPS may be planning to handle these deliveries in-house, similar to FedEx’s Ground Economy model, to save on USPS delivery fees and improve cost efficiency.

However, this transition poses execution risks, including package car capacity constraints and challenges integrating SurePost volumes during peak return periods.

Additionally, UPS has announced rate and surcharge increases beginning January 13, 2025, including a roughly 9.9% increase on 1-10 lb. SurePost packages and around 6% on SurePost packages above 10 lbs. There are also significant increases in Delivery Area Surcharge (DAS) and Extended Area Surcharge (EAS) fees, which may change the financial model for many shippers for rural deliveries.

These developments have introduced uncertainty and potential volume risks for UPS in 2025 as shippers and businesses seek alternative solutions for their delivery needs.

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