This week, FedEx took the opportunity to be the first of the big two carriers to announce their general rate increase, or GRI, for 2024. They announced that rates would increase 5.9% over last year – but the important part to note is that this year the increase is less than what shippers experienced last year (an announced 6.9% increase for 2023).
For those unfamiliar, each year the big two shippers – FedEx and UPS – announce what their annual rate increase will be for the coming calendar year. These announcements are typically made in the Fall timeframe, and are often accompanied by other rate changes, adjustments and peak season charges that will impact what the true cost increase is for a business that depends on parcel shipping.
The 5.9% will be what makes headlines the next few days, but as I alluded to above, it’s really not the complete story. There are additional charges and fees that will drive up what each shipper pays.
For example, as a part of this announcement, FedEx also released what their holiday season surcharges and fees will be. These additional charges are in effect during the “busy season” of October 2023 to January 2024.
- Last year, the peak/holiday season “additional handling” charge from FedEx for U.S. Express Package Services, U.S. Ground Services, and International Ground Service was an additional $3.45 per package. This year, that charge has more than doubled to $6.95 per package.
- The “oversize” charge for the peak season last year for these same services was $39.50 per package; this year it’s $73 per package. That’s an 85% increase!
And there’s likely more where that came from. In fact, FedEx’s news release mentions that “detailed rates and surcharges will be available on fedex.com on Sept. 7, 2023.”
There may also be a competitive reason that FedEx was looking to get their numbers out first – in order to put some pressure on UPS, who hasn’t announced yet and just completed a costly (and very public) union negotiation. The big two almost always announce identical base GRI increases, and this pressures UPS to not pass along increased expenses to customers (or at least forces them to be more creative in doing so.
The point is, it would be irresponsible if you are a business that relies on parcel shipping from FedEx to simply assume that your rates will increase by 5.9% and that’s all. As previous years have proven, there’s a lot more to the story.
That’s why we here at Reveel do a full analysis of all of the changes, fees, adjustments, charges, etc. that FedEx (and UPS) announces – not just the headlines they want you to read.
In 2023 our analysis found that despite announcing a 6.9% GRI, the real increase for FedEx customers was 9.1%. Our team assembles a complete rate guide each year to help shippers understand the true impact of the increases carriers implement, helping them better prepare for increased expenses, and improving their ability to negotiate a fair deal. Our annual rate guide includes: the actual modeled rate increase, which industries will be hit the hardest, details on the rate increases on common surcharges, what the new peak season surcharge changes are, and methods for forecasting your costs with the higher rates.
We’re already starting to crunch the numbers and will report back soon on what the true impact is for your shipping budget. Until then, don’t go planning out next year’s budget just yet.