Why January Is Prime Time for Carrier Contract Reviews?

When January kicks in, it is time to review the carrier contract because, with the new year, come new structural resets and new challenges to overcome. Carriers like FedEx, UPS, and Canada Post arrive with their new GRIs. In 2026, the increase is expected to be around 5.9% on average. UPS will likely implement the new rates first, during late December or the beginning of January, but for FedEx, the date is set to January 5.

With this annual reset come clear expectations, allowing shippers to decide how to measure the current terms and renegotiate new contracts. The process becomes easier thanks to the peak data being complete and fresh. In January 2026, the 2025 holiday surcharges and volume will be reflected in the billing history, allowing shippers to rely on data-based insights and not on speculation. Furthermore, the new budget reset opens doors for new discounts, new accessorial caps, and new service level agreements before the work begins.

Clause 1: Minimum Package Charges (MPC)

Minimum Package Charges are the lowest amount shippers pay for any shipment, regardless of any discount. While shippers tend to focus entirely on percentage discounts, it is the MPC that determines how much money is actually being paid for the services. Despite its importance, MPC continues to be the most overlooked clause.

For instance, there could be a robust double-digit discount that fascinates shippers, but in reality, when the time comes to assess the profits, the same shippers find that there are no savings. 

The reason is simple: MPC can override the entire discount. Evidence of this can be seen on Reddit, where one user asked why shipping normally is “super expensive” at MPC, to which many replied that they had to pay high shipping costs despite being promised massive discounts.

When ignored, MPC becomes part of the hidden cost floor, an amount that shippers end up “having to pay unknowingly” because the focus remains on baseline charges by default. This makes negotiating MPC crucial.

The most effective tip to negotiating MPC is lowering the minimum charge while setting zone-based and weight-based MPC exceptions. Shippers can also tie the MPC threshold to actual shipment profiles. January gives shippers a fresh start, refocusing carriers toward reassessing risks and volumes, which means they are open to renegotiations.

Clause 2: General Rate Increases (GRI) & Surcharge Escalators

General Rate Increase, or GRI, and surcharge escalators showcase how high the carrier can increase prices beyond base rates. With clever wording in contracts, carriers can exercise discretion. Flexible terminologies such as “subject to change” or “at carrier’s sole discretion” are giveaways, since the vagueness of these terms allows carriers to adjust increases to their heart’s desire without setting meaningful limits. Therefore, the GRI clause must be given a “microscopic-level” of scrutiny.

Costs can go up quickly due to surcharge escalators, as factors such as fuel, residential delivery, and peak-related surcharges are tied to external attributes or specific formulas that reset daily. Shippers end up absorbing these additional costs, harming their chances at meaningful profits if no meaningful caps are established from the beginning.

Therefore, renegotiating the contract to cap the annual charge growth rate is a must. Sub-clauses such as “delaying increase until set date” or advance notice requirements can be added to the contract so that shippers are not in for a rude, cost-heavy surprise.

However, vague terminologies can still find their way into the contract, which means a more practical solution also becomes necessary. Therefore, using volume data as a leverage point is recommended. Shippers can assess post-peak shipment history to gather evidence of service mix, lane stability, and package characteristics. Showing the carrier predictable volumes can weaken GRI assumptions and surcharge control from an early period.

Clause 3: Delivery Area Surcharges (DAS)

The extra fees that carriers impose on shippers when a delivery address’s ZIP code falls outside the “standard area” that carriers decide are called delivery area surcharges. These charges generally surface when the delivery area is remote, rural, or located in a region where terrain increases shipping costs. Keeping on top of DAS is relatively easy, since most carriers release an annual list of ZIP codes on which additional charges will be applied.

However, some users suggest that carriers often introduce delivery area surcharges where they may not be necessary. As one Reddit thread points out, even going a few hours away led to an increase of $4-$6 in DAS per piece. The interesting part is that prices drop drastically when the initial sender switches to commercial delivery or negotiates different pricing terms.

Another Redditor voiced frustration, stating that UPS imposed an additional $15 surcharge fee, which ended up being far more than the base transport costs.

As a preventive measure, shippers must map their frequent destination ZIP codes against the DAS list. This can help shippers route deliveries outside these zones. Another way to avoid DAS is by exploring volume-based incentives or regional carrier alternatives that do not apply the same surcharges. Talking to the carrier about negotiating exceptions when delivery trucks are already moving through the same DAS zones frequently is also a practical step.

However, timing matters when requesting exemptions. Shippers should perform a complete cost analysis during annual reviews, assessing when these charges emerged and mapping them against the number of times drivers operated within DAS zones.

Clause 4: Fuel Surcharges & Indexing Methods

Fuel surcharge refers to the impact of fuel prices on shipping costs, and the calculation method is often different across carriers. Most commonly, this charge is calculated using an indexed model related to publicly available benchmarks, such as the US Department of Energy’s weekly diesel and jet fuel averages. This could add 12 to 20% additional transportation costs, especially during peak seasons.

Two types of approaches are mentioned in contracts to deal with this. One is the flat rate, and the other is the indexed option.

With a flat rate, shippers get short-term predictability, but the trade-off is that the price is often in favor of the carrier. With indexed models, prices are adjusted weekly or monthly. This can reduce costs when fuel prices drop but can expose shippers to massive price surges when fuel prices go up. The index model’s biggest shortfall is the lag. For instance, a drop in fuel prices will not immediately translate into lower fuel surcharges.

Pointing to this problem was a user on Reddit named BoredMillennial82, who asked other users how UPS and FedEx “jacked up prices” when fuel prices had not increased. He stated, “UPS Fuel Surcharge was 18.5% even though diesel was ~$3.85/gal.” This highlights the need for transparency when it comes to fuel surcharges, so that shippers do not feel cheated.

Improving transparency or implementing caps in this situation means shippers must negotiate clear index references, audit rights, and update frequency. Proper annual contract reviews play a major role in placing meaningful caps on fuel surcharge percentages during peak seasons.

Clause 5: Earned Discount Structures & Volume Tiers

Earned discount structures connect pricing benefits directly to shipment volume through monthly or quarterly tiers. Increases in volume lead to higher discount brackets across base rates or specific services. While these structures reward growth on paper, in practice, they can introduce volatility if contract language is too rigid.

The real risk appears when a volume tier is missed. Many contracts allow carriers to reprice shipments at a lower discount level or remove earned discounts entirely for the period. This can cause shippers to miss out on expected savings. For instance, when trading volumes are not high during specific periods in which a healthy high-volume discount is available, higher-tier discounts are missed because of the contract structure.

To counter this, balanced language is key. The contract should therefore include protective clauses as well, such as grace periods, rolling averages, or fallback discount tiers during slow seasons. January reviews are the best opportunity to secure these protections, using prior-year volume data to justify flexibility before new volume targets are enforced.

How to Prepare for Carrier Negotiation

The better a shipper is prepared, the better leverage they have. Therefore, the best option is to start by pulling 12-month shipment data. This should include everything from carrier invoices to shipping platform details. Shippers must then stack the data properly so that weight, zone, lane, DIM weight, delivery type, and service level can be compared cleanly. If the data view is clean, it becomes easier to identify peak-season distortion and expose periods when surcharges were expanded stealthily.

The next step is to find the top surcharges and service types that are increasing expenditure. Here, shippers should focus on ranking additional charges by total dollars and frequency, and then separating costs by service mix. This means creating a table that clearly specifies the following costs:

• Ground vs Air
• Domestic vs cross-border
• Returns
• Oversize
• Delivery Area Surcharge (DAS)
• Fuel
• Residential
• Additional handling
• Peak-related fees

Shippers can then move on to building a cost-per-package breakdown. Here, base rates become secondary, and the analysis should focus on all-in cost per shipment by zone, weight band, and service type, with surcharges added in. With this data presented as evidence, defending specific asks such as caps, exemptions, tier protections, and service-level adjustments becomes easier.

What to Say (and What to Avoid) in Carrier Negotiation Calls

The right words, grounded in the reality of the situation, such as operational efficiencies, are important when carrying out carrier negotiations. The first statements that shippers make should focus on collaboration, not confrontation. They should show that shippers and carriers are aligned and starting from common ground.

For example, shippers can begin by referencing 12-month shipment stability, service mix, or predictable lane behavior to establish credibility and position themselves in a discussion that is not blatantly about discount requests, but about a commercial reset. Shippers should not lead with demands. Doing so makes the conversation confrontational from the beginning, removing the productive core of the discussion.

Shippers should also avoid focusing solely on volume leverage. Service consistency, low claims rates, clean address data, and predictable pickup behavior should all be considered, as they reduce carrier risk and operating costs. Emphasizing these factors during negotiations provides a solid justification to place surcharge caps and request MPC adjustments or tier flexibility. For experienced operators, cost-to-serve efficiency matters more than raw package totals.

Knowing when to walk away matters as well. If pricing relief is limited to short-term concessions or conditional discounts, shippers should escalate to regional account management or explore regional and alternative carriers. Walking away becomes a wiser option only when alternatives have been assessed and documented in advance.

Don’t Negotiate Blind: Benchmark Against Peers

External reference points make carrier negotiations stronger. Therefore, shippers should rely on shipping audit tools to establish that baseline by analyzing invoices, normalizing accessorials, and highlighting where costs diverge from expected ranges. These tools often reveal hidden issues such as inflated surcharges, ineffective discounts, or MPCs that counter negotiated savings.

To add more context, shippers should benchmark against industry averages. This means comparing cost per package, surcharge penetration, and service mix against similar shippers, as this helps identify whether current pricing is genuinely competitive or simply appears to be so.

For higher-volume shippers, a wise choice is to seek help from a parcel consultant. These consultants bring together contract data across multiple clients, allowing them to form a clear picture of benchmark discounts and surcharges more precisely.

Renegotiation Mistakes D2C Brands Make (and How to Avoid Them)

Accepting the First Offer

Accepting the very first offer is one of the most common and desperate mistakes D2C brands make during carrier renegotiations. Initial offers are typically conservative and designed to test urgency rather than reflect the best possible terms.

To avoid this issue, shippers should position the first offer as a starting point and not the final one. Treating it as an initial offer keeps leverage intact and creates room for discussions related to data, benchmarks, and operational realities.

Skipping Surcharge Details

Base rate discounts get all the attention because they appear glamorous, while surcharges are ignored because of their perceived value, which is another major mistake brands make. Overlooking accessorial charges such as fuel, residential delivery, DAS, and additional handling leads to massive overheads once operations begin, since these surcharges can quietly offset negotiated gains, especially when order volumes grow or delivery profiles shift.

To avoid this problem, shippers must review surcharge definitions, caps, and escalation rules, since these often yield more savings than simple incremental base rate concessions.

Not Tracking Post-Negotiation Compliance

Many teams assume savings are locked in once a contract is signed. However, if shippers are not diligent about ongoing invoice audits and compliance checks, agreed-upon discounts and exemptions can diminish over time due to billing errors or practices that diverge from the contract.

To avoid this issue, shippers must conduct periodic follow-ups with carriers. This ensures that shippers and carriers are not diverging from the terms outlined in the contract.

Final Thoughts

January remains the most effective window to review these clauses, as shippers have access to fresh peak-season data, reset budgets, and renewed carrier flexibility. Approaching negotiations with clean data, benchmarks, and clear fallback language can yield successful results, because there is no vagueness in the language and the data is clear.

With ShippingChimp, D2C businesses can now know exactly what their shipping invoices entail. ShippingChimp offers the most competitive rate along with 100% transparency into the cost breakdown of shipping invoices. The result is more informed conversations, clearer leverage, and contracts that perform as expected after signature, not just on paper.

FAQ: Carrier Contract Negotiation

When should I review my carrier contract?

Shippers should review carrier contracts annually. January is the best time, since it aligns with when new General Rate Increases (GRIs) are introduced, surcharge tables are reset, and complete peak-season data from the previous year is available. While it is possible to review contracts mid-year, shippers looking for more leverage should not do so unless volumes have materially changed or service issues are documented.

What if my carrier refuses to negotiate?

A refusal to negotiate signals that, as a shipper, you have not demonstrated sufficient leverage. In these situations, the conversation should be about structure and not discounts, since discounts create confrontation, which is a recipe for unsuccessful negotiations. Start talking about surcharge caps, minimum package charges, earned discount protections, or service-level adjustments instead.

Can I negotiate with Canada Post?

Yes, negotiation with Canada Post is possible, particularly for businesses shipping at consistent volumes. While Canada Post operates differently from private carriers, contract pricing, incentives, and service terms can still be reviewed. Negotiations with Canada Post should focus on structure and data, which means the shipper should present volume commitments, destination mix, and service types.

How do I compare multiple carrier proposals?

Comparing proposals involves assessing the carriers’ base rates, fuel surcharges, Delivery Area Surcharges (DAS), minimum package charges, dimensional weight rules, and earned discount tiers. The first task for shippers is to either request a proposal containing this information . They must then build an all-in cost-per-package model using historical shipment data applied against each proposal.

What happens if I switch carriers mid-year?

While it is feasible to switch carriers mid-year, careful planning is required, since shippers must first assess contracts with existing carriers. For instance, existing contracts may include early termination clauses, notice periods, or volume commitment penalties, all of which should be reviewed thoroughly. It is also important to take note of the potential operational impact, such as label generation, pickup schedules, customer delivery expectations, and returns workflows.

Can I negotiate if I use Shopify Shipping or a 3PL?

Yes, it is possible to negotiate if you use Shopify Shipping or a 3PL. However, the leverage and mechanics differ. With Shopify Shipping, rates are aggregated across merchants, which limits individual negotiation. However, baseline competitiveness is still present, since the focus shifts more toward service selection, zone optimization, and surcharge management rather than carrier-specific discounts.