With growth slowing and competition intensifying, parcel carriers are shifting their focus to margins, automation and pricing power—forcing shippers to rethink strategy.
The parcel market is shifting from a volume-driven environment to one increasingly defined by margin pressure, competition and complexity.
With growth moderating, carriers like UPS and FedEx are prioritizing profitability through cost reduction, network optimization, and investment in automation and technology. At the same time, competition is intensifying as Amazon, regional providers and new last-mile entrants continue to gain ground.
For shippers, the result is a more dynamic and less predictable environment—one in which pricing is more complex, service strategies are evolving, and success depends on diversification, visibility and constant optimization.
To help readers stay informed in this fast-changing market, Logistics Management brings together three of the industry’s top analysts for our annual Parcel Express Roundtable. This year’s panel features John Haber, chief strategy officer at Transportation Insight; Paul Yaussy, head of parcel contract intelligence at Loop; and Robert Persuit, senior director of business development at ShipMatrix.
Logistics Management (LM): How would you describe the current state of today’s parcel marketplace?
Robert Persuit: Crowded, competitive, and cloudy. Before the pandemic, the Big 3—UPS, FedEx, and USPS—handled 85% of domestic parcel volume. By 2025, that share had dropped to just 61% of the 23.9 billion deliveries made annually.
Beyond retailers like Amazon and Walmart, and regionals/super-regionals such as SpeeDee, LSO, and OnTrac, a wave of newer entrants—including Jitsu, UniUni, Better Trucks, Maersk, SpeedX, DoorDash, and GoBolt—is now competing aggressively for market share. In 2026, shipper adoption of these non-traditional carriers will help determine which names are still on that list in 2027.
Paul Yaussy: The parcel marketplace is more dynamic than ever—but in a very different way than it was just a few years ago. The industry has largely moved beyond reacting to sudden e-commerce shocks and unpredictable volume spikes. Instead, both carriers and shippers are operating in a more deliberate, efficiency-driven environment.
On the carrier side, the focus has shifted heavily toward cost reduction and network optimization. FedEx is in the middle of its Network 2.0 transformation, consolidating its previously separate networks into a more unified system. UPS is pursuing a similar strategy through its ‘Network of the Future’ initiative. Both carriers are investing in automation, consolidating operations, upgrading facilities, and, in many cases, closing locations—all with the goal of improving efficiency and lowering operating costs.
At the same time, carriers are not expecting significant parcel volume growth in the near term. As a result, the emphasis has shifted toward improving yield and increasing revenue per piece rather than simply chasing more packages.
For shippers, that creates both risk and opportunity. With carriers focused on margin and efficiency, pricing pressure can intensify. That means shippers need to stay vigilant in monitoring transportation spend and using data to guide decisions. The most sophisticated shippers understand how to maintain leverage with carriers, while those without strong visibility or analytics may increasingly feel the squeeze.
John Haber: I would say it’s very focused on margins as opposed to volume growth. The market is soft. FedEx is currently going through the whole transformation of their network and recently passed UPS in market cap and is very focused on optimizing profitability. On the UPS side, the shareholder return of the stock over the last four or five years has not been where shareholders would like it to be, whereas FedEx has been skyrocketing.
FedEx adds a lot of costs that they could take out of their operational plans because they had separate networks, and so their network integration and the optimization of just their different operating companies is going very well, and the stock is performing very well.
UPS is obviously moving big into certain sectors like healthcare and moving away from low-yield residential, e-commerce delivery, which is essentially what’s happened with [its business relationship with] Amazon. UPS’s cost structure is still a problem for them with the union contract, and now they’re cutting jobs. It’s creating a legal issue, that FedEx doesn’t necessarily have to deal with.
It’s a challenging, profitability-focused environment, but carriers still need to cover fixed costs—keeping the overall pricing environment relatively favorable for shippers. At the same time, rate pressure continues to show up through shifting fuel surcharge indexes, dimensional weight changes, and other mechanisms. In many ways, it’s the same playbook we see year after year.
LM: Can you describe the current rate and pricing environment?
Yaussy: The current rate and pricing environment has shifted somewhat in favor of the carriers. Both UPS and FedEx are increasingly focused on cost control, network efficiency, and consolidation of their operations. As a result, they’ve signaled that they’re less interested in chasing incremental volume and more focused on protecting yield and increasing revenue per piece.
Both carriers again implemented a 5.9% general rate increase (GRI) this year, which has become the familiar headline each January. However, that number rarely reflects the real impact shippers experience. Many surcharges are increasing at significantly higher rates than base transportation charges. When those changes are factored in, the effective increase for the average shipper often lands closer to 8% to 9% percent, depending on their shipping profile.
Beyond the annual GRI, pricing pressure continues throughout the year. Fuel matrix adjustments, Delivery Area Surcharge zip code realignments, and expanding demand or peak surcharges all contribute to incremental cost increases. In many cases, peak-related charges are also lasting longer each year, effectively extending the higher-cost shipping window.
Another emerging trend is the carriers’ interest in more dynamic pricing models. As their networks become more automated and data driven, pricing may increasingly adjust based on capacity, network utilization, and shipment characteristics. For shippers, that could mean less predictable pricing and an even greater need for strong data visibility and disciplined spend management.
Haber: It’s a challenging environment that’s far more focused on profitability than growth. At the same time, carriers still have fixed costs to cover, which keeps pricing pressure in the market—even if the broader environment remains relatively favorable for shippers. Rate pressure continues to show up through familiar levers like fuel surcharge index changes, dimensional weight policies, and contract terms. In many ways, it’s the same playbook we see year after year.
Carriers are trying to improve profitability through pricing mechanisms and contract structures. Those contracts are becoming increasingly sticky, with tougher penalties built in to discourage volume from shifting to regional carriers. But what you’re seeing is that more sophisticated supply chains are still finding ways to divert volume and manage risk more actively.
That’s where diversification becomes critical. Look at what’s happening in the Middle East right now—if you’re overly dependent on one provider, that’s not a sound risk management strategy. Diversification across the parcel network, maintaining optionality, and managing it closely every day are becoming more important than ever. With tariffs and broader uncertainty still in play, shippers need to stay flexible.
Persuit: Current parcel pricing shows battles on different fronts. UPS and FedEx are highly targeting healthcare, aerospace, automotive, data centers and high-value goods. Amazon Shipping and Door Dash are competing for high-volume B2C shippers.
Other carriers like Jitsu, Veho and GoFo are working to quickly expand network coverage to establish relevance. Pricing is extremely competitive; you just need to know which carriers to invite to the RFP that match your shipping profile.
LM: How are market conditions affecting service, and what role is the current state of the U.S. economy playing?
Haber: There’s a huge focus on automation and AI to optimize supply chains, and take costs out of the supply chain, as well as improve service. Service levels are very solid for the most part, in controllable environments. Uncontrollable environments are different when you’re dealing with wars, tariff changes, and things like that, and we have to change rating systems and technology, but service levels are solid.
The USPS levels are pretty good, but it’s a soft environment right now, so the service should be good. You’re seeing a lot of consolidation and facility closures, so there are some speed bumps where, for example, UPS is shutting down facilities and moving towards more automated facilities. You’re seeing some service issues there. Overall, service very solid. As far as what we’ve been tracking, it should be very solid, because there’s plenty of capacity.
Persuit: Obviously, the Iran conflict will continue to be the story for the near future. While international air and surface operations are feeling the immediate impact, there are domestic ripple effects as well. If oil prices climb to $180 per barrel, shippers could face more than a 10% increase in overall transportation spend due to higher fuel surcharges—triggering decisions on possible downgrades to lower service levels or exploring new carriers with lower cost/slower transit.
Yaussy: With economic growth moderating and consumer demand flattening, carriers are not expecting significant parcel volume growth in the near-term. That has led both UPS and FedEx to focus heavily on cost control and network efficiency as they adjust operations to match current demand levels. At the same time, broader macro factors such as tariffs and shifting global trade dynamics are creating additional uncertainty for shippers, particularly those with cross-border supply chains.
From a service perspective, these changes can create mixed results. Increased automation and network optimization can improve consistency and reliability in many areas. At the same time, periods of transition within the networks can introduce service variability as facilities, routes, and processes are adjusted. You may not necessarily see dramatic declines in reported on-time performance, largely because carriers have adjusted published transit times to better align with their current networks.
LM: How are the more established carriers adjusting to the ongoing influx of new, last-mile competitors?
Persuit: UPS and FedEx have both indicated a focus on B2B, SMB and healthcare—higher margin business. As 75% of parcel deliveries are B2C and growing, lack of focus on this addressable market will limit volume and revenue growth. I expect UPS and FedEx will find options to leverage their network and technology strengths while finding a way to get consumer delivery costs competitive.
Yaussy: UPS and FedEx lost some market share to last-mile competitors in 2025. Regional carriers, delivery startups, and retailer-built networks have taken share in certain lanes, particularly lighter-weight shipments and shorter zones. I expect that trend to continue into 2026 as shippers increasingly diversify their carrier mix.
You can see the large carriers responding through their pricing strategies. In recent annual rate increases, both UPS and FedEx have acknowledged competitive pressure in lighter weights and short-zone shipments. Those segments have generally seen slightly smaller increases compared to heavier packages and longer zones, where competition is less intense, and the national carriers still maintain an advantage.
This dynamic is another reason both carriers are prioritizing network efficiency and per-package yield rather than simply pursuing volume growth. Their ongoing network transformation initiatives are focused on lowering operating costs while protecting margins.
Haber: I’d say the established carriers are being forced to adapt to them—and, in some cases, effectively leverage the environment they’ve created. In fact, if you look at some major retailers today, they’ve essentially become parcel carriers themselves. That shift accelerated during the pandemic, when rates surged and companies were pushed to take more control of their own supply chains. Since then, they’ve had time to build out alternative networks and delivery options.
In large metro areas like Chicago or Atlanta, and within roughly a 200-mile radius around those markets, there are now plenty of courier and last-mile providers that can handle deliveries through lower-cost, gig-style models. They don’t carry the same cost structure as UPS or FedEx, and they’re not burdened by the same large-scale network and infrastructure requirements.
But you can have great service at a very cheap price, and with the new technology platforms, the technology is the key to be able to dual source, multi-source, and have visibility and be able to integrate. There’s still an integration problem. Technology isn’t perfect, obviously, but integrating it has become easier, so that you can have a lot of different carriers.
LM: How do you view Amazon’s current position in the parcel and last-mile markets—and where do you see it headed next?
Yaussy: When it comes to last-mile delivery, Amazon has firmly established itself as a major force in the parcel market. The company now delivers more packages annually than either UPS or FedEx. While Amazon does not publicly disclose detailed delivery performance metrics, the available indicators suggest its service levels are generally comparable to those of the traditional carriers.
Amazon also continues to expand its logistics ambitions. Although the company remains private about its long-term strategy, there are clear signals that Amazon Shipping is steadily growing. We’re increasingly seeing Amazon pursue opportunities with mid-size and larger shippers when the shipping profile aligns with its network. In many cases, those proposals are highly competitive, which is causing shippers to strongly consider Amazon as a carrier but also the big two must decide if they want to compete on price.
I’d speculate that we’re two to three years away from Amazon Shipping being a full-fledged competitor to UPS and FedEx—given that they’re already in 30-plus origin metros and counting. But it’s coming, and it only makes sense given Amazon is already delivering its own products nation-wide because the network and infrastructure already exist.
Haber: Amazon is moving big into the LTL and the heavy-freight market and having success in a couple of European countries, but I’m still skeptical about it in the U.S. and the heavier LTL and heavy freight market. It has a lot of capacity, but I’d like to see some results proving that out. Its reporting is a little bit murky, because they have so many different businesses, coupled with how its costs are allocated. UPS and FedEx transfer pricing between business unions and things like that.
We know that Amazon has been subsidizing the logistics business with profits from other business, mainly the cloud, but it’s definitely moving into different areas of freight to grow its parcel volumes. Like Paul said, its going to be the biggest parcel provider here in a couple of years. I don’t see that changing.
Persuit: Think about this: Amazon delivered 6.7 billion U.S. packages in 2025—more than any other carrier—despite Amazon Shipping still not fully scaled for non‑Amazon customers. Amazon will keep moving more UPS and USPS ‘glide down’ parcels in‑house while growing Amazon Shipping, widening its lead in U.S. package delivery in 2026.
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?
Haber: The USPS lost $9 billion for fiscal 2025, but it’s making progress. There’ve been new services rolled out and price increases have been pretty hefty. But it’s still not making any money. I don’t see that changing drastically, even with the reforms they’ve put in place. Is it a private business or not? It’s a quasi-government entity, and handcuffed in certain areas. The USPS tries to act like a private business, but it’s not. It does not have the same rules.
It also doesn’t have the same sales force that UPS and FedEx have, and its technology is still not up to speed with some of the other providers. Their billing systems are still hard to use, and the visibility is still not where it needs to be. In many cases, it is offering the service and cost, especially on the ground side, in certain zones. It’s kind of like a regional—they’re making money on the short zone stuff and can inject into delivery destination units. The USPS has made progress, but I think there’s still a lot of work to be done.
Persuit: Yes, 100%. Emphasizing Ground Advantage—and deemphasizing Priority Mail—has been a big win for the USPS. ShipMatrix analytics show that USPS Ground Advantage on-time performance scores are competitive and this product continues to gain favor with shippers.
Yaussy: Yes, I do think the USPS has made meaningful progress as a parcel carrier in recent years, largely driven by its 10-year transformation initiative, Delivering for America. The goal of that plan has been to stabilize the organization financially while modernizing the network and improving operational performance.
One of the biggest changes has been a stronger focus on parcels as a core part of the business rather than just something that moves alongside traditional mail. USPS has invested heavily in new sorting technology and redesigned parts of its network, including the rollout of regional processing and distribution centers intended to improve efficiency and increase package throughput.
USPS still plays a slightly different role than UPS or FedEx, but its strength in lightweight, residential delivery continues to make it an important part of the parcel ecosystem.
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?
Persuit: The UPS Network of the Future initiative plans to save $3 billion by 2028—converting manual to automated sortation. An Amazon October 2025 press release boasts 1 million robots have been deployed for sortation. AI deployment by major carriers for route optimization, robotic sortation, predictive maintenance are rapidly evolving and carriers are willing to spend IF it improves productivity.
Yaussy: AI is becoming a foundational layer for both carriers, helping them run more efficient networks while protecting margin in an increasingly competitive parcel market. Right now, their investments in AI don’t necessarily show up in flashy, forward-facing ways, but they’re helping both carriers drive operational efficiency, improve network design, and optimize pricing.
Haber: In a soft volume environment, carriers still have to deliver profitability and shareholder returns, and if that’s not going to come from higher package volumes, it has to come from running the network more efficiently.
That’s why investment in automation, digital technology and AI has become so important. Carriers are looking for ways to take cost out of the network, improve throughput and rely less on labor-intensive processes wherever possible. For large players like UPS in particular, that’s a major priority, especially as international operations become more complex and harder to predict.
If you look at where the major parcel carriers and integrators are investing, a lot of that money is going into technology and AI because it remains one of the most effective ways to protect margins until volumes improve.
At the same time, much of the parcel market’s growth is coming from residential e-commerce, which is not always especially profitable. That’s why carriers are also focusing on lockers, pickup and drop-off points, micro-fulfillment and other strategies that improve delivery density. Delivering one package to one home is a difficult economic model.
LM: How do you view the impact of tariffs on the parcel market?
Yaussy: This is one of the more popular questions I get, and I don’t know if anyone in the parcel space has a great answer because the rules of engagement keep changing. Tariffs have added complexity for shippers as they try to get ahead of these massive cost increases by shifting where they manufacture or source product or shifting when they ship.
With uncertainty, shippers see unpredictable fluctuations in shipping costs and demand shifts. So, to combat this, I often advise shippers to counter by seeking cost savings in their parcel agreement and parcel operations, like looking at ways to reduce costs through deeper discounts and making changes to things like packaging or consolidating volume.
Haber: It’s a distraction. It’s very hard to forecast and plan your costs and budget, as well as to manage your systems and build customers amid of the ongoing tariff-related developments.
Persuit: ShipMatrix analytics show UPS and FedEx carrier billing would increase by $4 billion annually under the previous tariffs. If the administration finds a way to circumvent the Supreme Court ruling, Tums consumption by CFOs will continue to escalate—and tighten transportation budgets. Otherwise, the refund of roughly $297 billion in collected tariffs could be a windfall shot in the arm for the economy that will drive GDP and parcel volume growth.
LM: What advice do you have for parcel shippers in 2025?
Haber: My advice for parcel shippers is that you can’t be dependent on one provider. You can’t be dependent on one geographical region. You have to have a risk management strategy, and you’ve got to be able to move very quickly, because things change on the dime.
You need to have the technology, visibility, transparency strategy and execution. That’s the model I developed a long time ago, and nothing has changed. You have to be very nimble, and you’ve got to manage it every day. You can’t just negotiate a contract and put it on the shelf. Things are very dynamic. They change very rapidly. Your shipping costs can be a competitive advantage, or it can put you out of business.
Persuit: You need to manage your spend monthly, not every three years. Parcel dynamics, surcharges and carrier options are changing rapidly. Use metrics dashboards for spending trends and manage carrier/service selections to stay on budget and strike while the iron is hot. Shippers have never had so many options for parcel services. Significant savings can be attained. Research, plan and onboard one or more new carriers—then monitor, adjust, and repeat.
Yaussy: In recent months, we’ve seen a seen slight shift towards carriers having a little more leverage than shippers because they’re overtly stating margin yield is more important than volume gains as the overall parcel volume has leveled off. I bring this up because it’s important for shippers to understand this, but also know that savvy shippers are still seeing very positive results in carrier negotiations.
My advice doesn’t change from year to year—parcel has almost become a constant negotiation. Yes, there is such a thing as negotiation fatigue, so you have to pick your spots. But, when the carriers introduce new charges or price increases on a regular, almost monthly basis now compared to annually, shippers should view that as opportunities to reexamine and renegotiate.
