2025 Kicks Off: UPS Hikes, Return Scams, and Global Trade Shake-ups

The supply chain industry is starting 2025 with plenty to pay attention to.

UPS has already announced a new round of rate increases, while retailers continue dealing with return fraud that now accounts for roughly 15% of returns.

Trade policy is creating new questions as well. Trump’s proposed tariffs cause some companies to revisit sourcing decisions. Manufacturers across Asia continue operating in a slower export environment.

Transportation markets shift too. Container rates across the Pacific are moving higher again. Mexico's tariffs on apparel are creating new challenges. This hurts companies that rely on imports in global supply chains.

A lot of events this year that businesses have to keep an eye on. And how does this affect your business?

SurePost’s New Year’s Surprise: The Partnership That Vanished Overnight

The shipping world started 2025 with a bang — and not the good kind. When UPS and USPS failed to renew their partnership agreement on New Year’s Eve, thousands of businesses woke up to rejected shipping labels with zero warning. 

Let’s break down the drama and what it means for your packages.

The Money Behind the Breakup

UPS dropped a bombshell by raising SurePost rates 9.9% for packages under 10 pounds and 6% for heavier items. But here’s the real kicker — they cranked up delivery area surcharges by a whopping 61.8% and extended area surcharges by 69.4%. Some shippers got slammed with total increases of up to 30%. The message? UPS wants to handle city deliveries themselves while pushing rural shipments to other carriers or their pricier Ground service.

P.O. Boxes and Military Addresses: Left in the Dust

The split hit P.O. box and military address shipments particularly hard. Starting Jan. 2, urePost simply stopped accepting these packages — period.  It left countless businesses and customers scrambling for alternatives. 

The only options now? Direct USPS shipping or finding another carrier that still partners with them for final delivery. Meanwhile, UPS appears to be following FedEx’s playbook by bringing more deliveries in-house, though they’re keeping surprisingly quiet about their long-term plans.

Why 1 in 6 Returns Were Fake in 2024

The next time you’re standing in line at a store’s returns counter, look around. That perfectly normal-looking person next to you might be pulling a fast one. Returns fraud exploded to an eye-popping 15.14% of all returns in 2024, outpacing even the total return rate of 13.21%. When retailers tallied up their $5.19 trillion in sales last year, a staggering $685 billion boomeranged back through their doors — and a big chunk of that wasn’t legitimate.

The Fraudster’s Playbook

Picture this: You buy a designer dress, rock it at a wedding, and then return it the next day. Turns out, you’re not alone — 60% of retailers caught customers “wardrobing” their merchandise in 2024. But that’s just the beginning. Crafty fraudsters got even bolder, with 55% of stores battling returns paid for with stolen credit cards and counterfeit cash. Meanwhile, 48% faced the classic five-finger discount: trying to return items that were straight-up stolen.

Why Tighter Rules Aren’t Turning the Tide

Retailers find themselves in a hard place. Despite cranking up their return restrictions, the fraud keeps flowing. Michael Osborne, CEO of Appriss Retail, puts it plainly — stricter policies haven’t stemmed the tide of bogus returns. The real challenge? Stores must somehow protect their bottom line while keeping honest customers happy. With $685 billion in returns on the line, finding that sweet spot between security and service has become retail’s ultimate balancing act.

Prepping Your Business for Trump’s Trade Shake-Up

Supply chains face a fresh wave of disruption with President-elect Trump’s planned tariffs — 25% on Mexico and Canada, plus an extra 10% hitting Chinese goods. Want your company to stay ahead? Let’s break down what smart businesses do when tariffs loom.

Quick Fixes Won’t Cut It — Why Stockpiling Falls Short

Hoarding inventory might feel like a safe bet before Trump takes office, but experts warn against putting all your eggs in that basket. While front-loading shipments offers temporary relief, it leaves food suppliers and companies with perishable goods particularly vulnerable. The real challenge you’re up against is building lasting solutions that work years down the road, not just until Inauguration Day.

Playing the Long Game — From Southeast Asia to Free Trade Zones

Smart companies see beyond the obvious moves. Some manufacturers have already spent five-plus years diversifying their sourcing — Vietnam, India, and Poland have emerged as popular alternatives to China. 

Companies even use foreign-trade zones. As long as it helps them reduce customs-related costs and improve flexibility.

Others look at their supply chains, tracing materials and components back to their source. More visibility where products come from, the easier it takes to respond to trade policy changes

 And while domestic production sounds great on paper, experts point out a catch — many “American-made” products still rely heavily on foreign parts that won’t escape those tariff hikes.

Asia’s Manufacturing Engine Revs Up, But Export Clouds Loom

Despite global headwinds battering trade, Asia’s manufacturing sector showed remarkable resilience in December 2024. The S&P Global manufacturing PMI revealed a mixed bag of wins and worries — while production lines buzzed with domestic activity, export orders remained stuck in reverse gear for the 24th straight month.

Local Markets Save the Day, But For How Long?

The Philippines emerged as December’s manufacturing superstar, recording its strongest output and order surge since April 2022. Indonesia bounced back from a six-month slump, while Thailand hit a four-month peak. Taiwan’s manufacturing pulse reached its highest beat since July. Yet beneath these bright spots lurked growing anxiety — manufacturer confidence across ASEAN dropped to an eight-month low, falling below long-term averages according to S&P Global data.

Tech Giants and Trade Wars: A Tale of Two Forces

South Korea’s manufacturing mood turned particularly gloomy, marking its first negative production outlook since COVID-19. Meanwhile, Taiwan rode the AI wave to a six-month export order high, with manufacturers banking on diverse client bases for growth. But China’s story captured the region’s broader tension — while new orders rose for the third straight month, optimism wobbled under U.S. trade pressure. 

Demand for AI-related products is helping manufacturers in countries. These countries, like South Korea, Taiwan, and Vietnam, benefit greatly

The rest of the export-driven economies in Asia — the bigger challenge remains the same. With soft global demand, domestic spending can’t offset slower exports

Container Rates Soar as Shippers Scramble for Asia-US Routes

Shipping rates across oceans between Asia and the U.S. are rising. West Coast rates increased 8%, while East Coast rates took a smaller 3% increase

Industries expect that trend to continue. The current trend of uncertainty from policy changes, seasonal demands, and even global events — this is really an uncertain year for ocean freight.

Red Sea Chaos Meets Lunar New Year Rush

The brewing chaos started when Yemen’s Houthi rebels forced ships to abandon Red Sea routes, sending vessels on longer routes around Africa. Now add pre-Lunar New Year demand (Jan. 29 to Feb. 12) into the mix, plus importers racing to beat potential Trump tariffs, and you’ve got a recipe for sustained high rates. Freightos research head Judah Levine expects the typical post-holiday volume drop will barely register this year as companies keep front-loading shipments.

Mexico: The Wild Card Reshaping US-China Trade  

While Chinese exports to the U.S. have declined since the 2017 trade war began, companies found a creative workaround — routing goods through Mexico. The strategy worked so well that Mexico overtook China as America’s top trading partner. But Mexico’s recently inaugurated President Claudia Sheinbaum threw a wrench in the works, signing a new law slapping up to 35% tariffs on Chinese apparel and restricting the duty-free IMMEX program. The move leaves U.S. importers scrambling once again, especially e-commerce sellers who relied heavily on the Mexican route to dodge U.S. duties.

South America’s Port Party Hits Capacity Crunch

Want to know why shipping rates from South America to the U.S. hit a whopping $5,800 per container in October 2024? Picture trying to pour a gallon of water through a funnel meant for a cup — that’s what happened when surging trade met squeezed port capacity.

Growing Pains: When Construction Meets Chaos

Latin American ports picked one heck of a time for their ambitious expansion projects. Right as they were knocking down walls and expanding docks, U.S. East and Gulf Coast ports shut down for three days in October. 

The unfortunate timing created a domino effect. Vessel bunching and container shortages rippled across South American facilities. Many carriers rerouted and canceled sailings to stay on schedule. The trade-off? Leaving cargo behind.

Volume Growth Keeps Testing System Limits

Here’s the kicker — even with all the headaches, trade between the U.S. and Latin America jumped 4.3% through October 2024. Cargo heading north rose 3.8%, while southbound shipments climbed 4.8%. Now throw in the possibility of new China tariffs pushing more U.S. companies to shop closer to home, and you’ve got yourself a pressure cooker situation. 

Would ports and shipping lines handle the increase in volume with the state of everything? Plus the possibility of another dockworker strike on January 15, which could create additional disruptions.

Mexico’s Fashion Fast Track Hits a Roadblock

Finally, let’s take a closer look at how Mexico closed out 2024 with a fashion industry bombshell — hitting clothing imports with steep new tariffs between 15% and 35%. The surprise move blindsided many U.S. retailers and their warehouse partners and sent them into a Black Friday-style frenzy.

Border Bargains Get the Boot

Remember when shipping clothes through Mexico was smoother than a silk scarf? Those days vanished faster than last season’s trends. President Sheinbaum’s Dec. 19 decree pulled the plug on a sweet setup in which brands could dodge duties by parking their threads in Mexico before zipping them north. Flexport CEO Ryan Petersen didn’t mince words, calling it a “nightmare scenario” for logistics companies that built their business around this trade structure.

Retailers Play Musical Warehouses

Now fashion brands are playing a high-pressure game of “where do we ship from next?” ShipHero CEO Aaron Rubin spilled the tea: Companies can either pivot to Canadian warehouses (still duty-free) or bite the bullet and ship straight from U.S. soil. Mexican Economy Secretary Marcelo Ebrard claims some companies were playing fast and loose with the rules — importing finished clothes under a program meant for manufacturing parts. His underlying message? Mexican manufacturers deserve a fair shake, and the duty-free party’s over.

New Year, New Gear — Time to Get Your Freight Audits in Check

From UPS’ holiday surprise to Mexico’s apparel ultimatum, 2025 is already serving up a buffet of supply chain challenges that would give any logistics manager heartburn. That’s why having robust freight and parcel audit capabilities is integral for survival, whether you’re navigating carrier rate increases, cross-border complexities, or the growing cost of returns. Automated freight audit and payment capabilities can help you capture every opportunity for savings while maintaining visibility across your entire supply chain, and Intelligent Audit can help you with all of the above with cutting-edge solutions:

• Freight Audit Software. Review, manage, and audit transportation spend. 
• Real-Time Visibility. See what's happening across their supply chain as it happens. 
• Anomaly Detection. Flags unusual charges, shipment activity, and other exceptions that deserve a closer look. 

Get started with Intelligent Audit, and learn how 25 years of supply chain innovation can transform your operations today.