The 2025 holiday shipping season is shaping up to be one of the most complex in recent memory. Freight networks are stable compared to the chaos of the early 2020s, yet parcel carriers and retailers face new challenges: surging costs, labor constraints, and a more cautious consumer base. As FedEx, UPS, and the U.S. Postal Service (USPS) roll out their peak season surcharges, shippers are grappling with how to protect margins while ensuring deliveries arrive on time.
Carriers are entering this season with a clear focus on profitability. Both UPS and FedEx have raised their peak demand surcharges higher than last year, targeting large shippers who exceed weekly average volumes. According to FedEx’s 2025 Demand Surcharge Schedule, additional handling and oversize fees can add between $2 and $6 per package, depending on service level and volume. UPS is mirroring this approach, applying volume-based surcharges throughout November and December, citing higher costs for labor and air capacity.
Even the U.S. Postal Service joined the trend, announcing a temporary holiday price adjustment effective October 6 through January 26, adding $0.25 to $7.00 per package on Priority Mail and Ground Advantage. The USPS emphasized that this is now a “standard annual adjustment,” signaling that temporary surcharges may be here to stay.
Beyond base rate increases, carriers have quietly tweaked pricing formulas. FedEx and UPS now round up all package dimensions to the next whole inch, effectively inflating the dimensional weight used for billing. This change could raise costs by 5-10% for many e-commerce shippers. In other words, even small packaging inefficiencies now carry a heavier price tag.
The Labor Divide: Amazon’s Growth vs. Legacy Carriers’ Cuts
While legacy carriers trim staff, Amazon continues to expand aggressively. The company announced it will hire 250,000 seasonal workers in the U.S. this year, matching its 2023 and 2024 hiring levels. In a press release from Amazon, the company said wages will start at $19 an hour, with full-time logistics roles averaging $23 per hour plus benefits. Amazon also pledged over $1 billion in additional pay increases for its logistics and delivery workforce.
By contrast, UPS has been shrinking its workforce. The company has eliminated 48,000 positions so far in 2025, primarily part-time warehouse and sorting jobs. This downsizing follows its costly 2023 contract with the Teamsters Union, which significantly raised wages and benefits. FedEx has also reduced hiring, consolidating its Ground and Express divisions to streamline operations and cut overhead.
This divergence in labor strategy has practical implications for shippers. UPS and FedEx will be more selective about capacity allocations during high-volume weeks, focusing on top-tier customers with guaranteed contracts. Amazon, meanwhile, is offering its Amazon Shipping service to third-party merchants and Fulfilled by Amazon (FBA) sellers as an overflow option. While Amazon introduced its own peak surcharges beginning October 26—including extra fees for oversized packages—it remains a valuable release valve for shippers unable to secure guaranteed volume with UPS or FedEx.
Retailers Brace for a Cautious Consumer
The retail sector enters Q4 with cautious optimism. According to an Accenture survey, 70% of retail executives are worried about supply chain shocks this holiday season, and nearly two-thirds fear inventory shortages due to delayed shipments. Many have responded by launching promotions earlier—some as early as late September—to spread demand over a longer window.
The early-promotion strategy has mixed results. Consumers are shopping sooner but spending more selectively. Adobe Analytics data shows that online sales during early October were up just 1.5% year-over-year, suggesting restrained demand even amid heavy discounts. To compensate, many retailers are leaning on omnichannel tactics like buy online, pick up in store (BOPIS) to ease pressure on parcel networks and reduce shipping costs.
This diversification helps, but it also complicates fulfillment logistics. Retailers must balance e-commerce and in-store inventory, often requiring real-time visibility between distribution centers and stores. Many are turning to AI-driven demand forecasting tools, which use historical data and macroeconomic indicators to plan staffing and carrier allocation more accurately.
Warehouse Labor: Tight Markets and High Turnover
Behind the scenes, warehouses and fulfillment centers are struggling to keep pace with holiday demand. Labor availability remains tight across major logistics hubs. The Bureau of Labor Statistics reports that the warehousing sector’s quit rate remains above 3%, indicating persistent churn even as unemployment stays low.
To fill the gap, companies are ramping up incentives. Seasonal warehouse pay has risen to an average of $20.50 per hour, according to Prologis Research, with many facilities offering signing bonuses and flexible shifts. Some 3PLs have partnered with gig-work platforms like Instawork and Wonolo, which can fill same-day shifts via mobile apps. This allows warehouses to scale up rapidly during surges, though it raises concerns about consistency and training.
Employers are also fighting fatigue among permanent staff. A 2025 Accenture frontline workforce study found that one in four retail and logistics workers frequently feels “exhausted” after difficult shifts, with burnout impacting productivity and retention. In response, companies are deploying “well-being” initiatives—providing catered meals, ergonomic rest zones, and capped overtime hours. While these efforts improve morale, the underlying labor imbalance remains unresolved.
Automation continues to fill some of the gaps. Amazon operates over 750,000 robots across its global fulfillment centers, while smaller operators increasingly use robotics-as-a-service solutions to automate picking and packing. Robotics firm Locus Robotics reported a 41% increase in active warehouse deployments this year, as mid-sized retailers adopt automation to mitigate labor shortfalls. Even so, robots remain an enhancement rather than a replacement—human flexibility and judgment are still indispensable during peak chaos.
Strategies for Navigating Peak Season 2025
With surcharges rising and labor tight, logistics teams must get creative to protect service quality. Key strategies include optimizing packaging to reduce dimensional weight, diversifying carrier mixes, encouraging slower or consolidated deliveries, and enhancing warehouse efficiency through cross-training and smart scheduling. Transparent communication with customers about order-by dates and realistic delivery expectations also helps flatten last-minute spikes and prevent service breakdowns.
This holiday season will likely be defined by discipline over volume. Carriers are prioritizing profitable shipments, retailers are managing promotions carefully, and consumers are shopping more deliberately. The lesson from the last few years is clear: reliability and transparency matter more than raw speed.
If there’s one advantage to 2025’s challenging landscape, it’s that both carriers and shippers are better prepared than they were during the pandemic surge. Digital tracking, diversified carrier options, and smarter inventory planning are now standard practice. While costs remain elevated, the industry has learned to operate within these constraints—focusing on consistency and customer experience.
In short, Peak Season 2025 won’t break records for parcel volume, but it will test the logistics sector’s ability to balance resilience with profitability. Success will depend on foresight, collaboration, and data-driven agility. As Luna Logistics continues to support shippers through the year’s busiest months, one thing remains certain: preparation is the best protection against the chaos of peak season.