Parcel Giants Chase Volume With Discounts Despite Record Rate Levels
The parcel delivery market is sending mixed signals. While ground delivery rates hit record highs in Q4, UPS and FedEx are simultaneously offering more aggressive discounts to win over volume shippers, according to the latest TD Cowen/AFS Freight Index.
The dynamic reveals a market where headline rates continue climbing, but carriers are willing to make significant concessions for the right customers. It's a departure from the pricing discipline both carriers maintained during the pandemic boom, when capacity constraints gave them the upper hand.
What's Driving the Discount War
Both major carriers are competing for lucrative, high-volume accounts that can help fill networks operating below capacity. Despite elevated rate cards, the willingness to negotiate suggests carriers are prioritizing network utilization over strict rate discipline. This shift comes as e-commerce growth has moderated from pandemic peaks and competition from regional carriers has intensified.
For 3PL operators managing parcel spend for clients, this environment creates opportunity. The gap between published rates and negotiated discounts is widening, meaning there's real money on the table for those who can aggregate volume or demonstrate network efficiency. But it also signals that carriers may be under more pressure than their rate announcements suggest—something to watch when planning capacity for peak seasons.
The Q4 data captures a pivotal moment in parcel economics. While shippers face sticker shock from rate increases, those with volume leverage are finding carriers more willing to deal than they've been in years. That's a window 3PLs should be exploiting in their carrier negotiations.
