As we enter 2026, distribution and logistics teams face mounting pressure from escalating freight costs. Both UPS and FedEx have announced their annual rate increases, with average hikes of 5.9% to 6.9% across most services. Combined with persistent fuel surcharges that continue to climb month over month, the financial impact on operations is significant.
For operations leaders managing distribution networks, freight spend often represents 15-25% of total logistics costs. A 6% rate increase, compounded by volatile fuel surcharges, can quickly erode margins if left unaddressed. But there's a silver lining: proactive operators are finding ways not just to mitigate these increases, but to gain competitive advantage through strategic freight management.
Key Insight
Companies that implement even 2-3 of these strategies typically see 8-15% reductions in freight spend within 90 days—more than offsetting carrier rate increases.
Before diving into strategies, it's critical to understand what's driving these increases:
The cumulative effect? Many shippers are seeing effective rate increases of 10-15% when all factors are considered—not just the advertised 6%.
Implement these tactics to offset rate increases and improve your bottom line.
Don't accept the general rate increase at face value. Most shippers have more negotiating leverage than they realize, especially if you ship 500+ packages per week or spend $100K+ annually with a single carrier.
Action Steps:
Real-World Result: A mid-sized distributor we worked with secured a 70-90% discount across small parcel ground accessorial fee's and surcharges by leveraging competitive bids—saving $275K annually.
Dimensional weight (DIM) pricing penalizes inefficient packaging. With carriers using a 139 DIM divisor (for domestic), even small improvements in box sizing can yield significant savings.
Action Steps:
Real-World Result: By reducing box sizes by an average of just 2 inches per dimension, one e-commerce client cut DIM weight charges by 18%, saving $95K annually on 250K shipments.
Shipping frequency and order batching have massive impacts on freight costs. By strategically consolidating shipments, you can reduce both per-unit shipping costs and total shipment volume.
Action Steps:
Real-World Result: A distributor consolidating California-bound shipments at a zone-skipping hub reduced Zone 7-8 parcel volume by 40% and cut freight spend to that region by $220K annually.
Studies show that 10-15% of carrier invoices contain billing errors, incorrect surcharges, or service failures. Most shippers never catch these mistakes, essentially paying for carrier errors month after month.
Action Steps:
Real-World Result: One client recovered $47K in billing errors and service failure refunds in their first 6 months of systematic invoice auditing—a 100% return on the auditing service cost.
Over-reliance on UPS or FedEx exposes you to every rate increase they implement. Regional carriers and niche providers often offer 15-30% savings for specific lanes or service types—without sacrificing service quality.
Action Steps:
Real-World Result: An e-commerce company shifted 35% of West Coast volume to OnTrac, achieving 22% cost savings on those shipments ($165K annual savings) while maintaining 98.5% on-time delivery.
At Northline Logic, we've helped dozens of distributors and manufacturers reduce freight costs by 15-30% through data-driven carrier negotiations, packaging optimization, and logistics network design.
Average Annual Freight Savings
Avg. Cost Reduction Achieved
Typical Time to Results
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