Let’s take a minute to talk about the annual GRI (general rate increase) from the big two - FedEx and UPS. While this year’s announced 5.9% increase was less than the record increases of the past few years, it would be wrong to think of it as having less of an impact on your company. The big two are still doing everything in their power to increase the amount of money they make from servicing your business.
Every year, the team at Reveel undertakes a data analysis project where we look at what the true impact of the rate increases is on shippers. We look beyond the reported rate, factoring in the updated surcharges, fees, changes and requirements to calculate the true costs to expect in the coming year. As a part of this, we review every single shipment made by our customers and run their output against the new rates and charges to see what they would have paid if the increases were already in place.
To no one’s surprise, the announced GRI was only part of the story. We found that in 2024 the average UPS customer will pay 7.72% more, and the average FedEx customer will pay 8.17% more than the year prior.
Having this data and information about your shipping profile and expected expenses at your fingertips is critical to not only plan budgets appropriately, but to prepare yourselves for negotiations/renegotiations with the carriers. Even increases like these, which are smaller than in recent years, are still sizable enough to damage a small or midsize business’ profitability.
So the question becomes: what can I do now? How do we offset these charges, or change our shipping actions to bring costs down?
These are exactly the kinds of questions shippers should be asking - and it’s a two part answer. (1) In order to manage these increases and change your actions/negotiate with carriers you need to know how they’ll impact you exactly, which means having the relevant, company-specific data on hand. (2) While the start of the year is when shipping budgets are at the top of everyone’s mind, the reality is that in order to truly optimize your shipping expenses, you need to begin a process of actively managing your shipping contracts. There are many times throughout the course of the calendar year where adjustments can be made that will have a real impact on your bottom line.
The good news? Early reports show that the big two carriers have been much more willing to negotiate and take on business that they may have shied away from in years prior. For shippers to take advantage, however, it is absolutely imperative to understand how the new rules, surcharges and fees on tap for 2024 will impact their businesses.
The time to act is now.
Josh Dunham is the co-founder and CEO of Reveel, founded in 2006 to help shippers level the playing field for carriers. The company’s Shipping Intelligence Platform provides shippers with the actionable insights they need to make decisions that optimize their operations and deliver opportunities to save money.