Last week, we reported that FedEx announced its annual general rate increase (GRI) of 5.9%. We made two observations at the time: (1) The devil will be in the details, and (2) UPS will not be far behind.
Both predictions were accurate. First, FedEx revealed the details of its rate increases: While the average still nets out to 5.9%, there are key increases which will undoubtedly hit commercial shippers much harder than expected.
Are you a shipper that does a lot of lightweight ground shipping? Well, be prepared for minimum increase charges around 5.6%. However, the home delivery increase, a key metric for many of Redwood’s B2C clients, will be 6% for Express Residential and 7.8% for Home Delivery. Our team expected to see those increases and is actively analyzing current client spend data to identify suitable benchmarks. We’re also setting up discussing with shippers interested in understanding what their spend will be once the rates go into effect.
As your partner, we will work with you to help mediate your parcel spend with FedEx and UPS over the course of our engagement with you. Redwood Parcel built its model to empower its customers to manage and effectively negotiate around the rates. We are happy to work with you to explain the additional surcharges and the impact to your supply chain.
Not surprisingly, UPS announced its own annual average rate increase for 2024. Effective December 26, 2023, the average increase for Ground, Air and International will also be 5.9%. While full details have not yet been provided, we anticipate they will be similar to those of FedEx.
Are you planning for the holiday season yet? UPS already released its surcharges which will take effect between October 1 and January 13. Shippers can expect to see increases up to $10 from 2022 figures, depending on the size of the package. We are actively logging all increases and determining how we can appropriately benchmark and advise our clients to have effective negotiations.
Redwood’s Parcel Advisory and Carrier Agreement Optimization Team guides you through how these changes to fees and surcharges may impact your business. By taking a white-glove approach to all our clients’ networks, and utilizing market-leading software to identify larger areas of risk in your parcel contracts, we will thoughtfully build a plan based specifically on your network analysis results.
Don’t navigate this challenging market on your own. Let the Redwood Parcel team customize a plan tailored just for you.
