As expected, UPS announced its annual GRI (General Rate Increase) for 2024 and it’s exactly the same as FedEx announced earlier – a 5.9% increase. Given the history of the big two historically matching each other’s rate increases, this comes as no surprise. There was also little chance that UPS – after having agreed to an expensive labor contract earlier this year – would be able to increase costs on its consumer base and expect to retain its customers.
Just to recap for anyone unfamiliar with the process, the big two carriers – FedEx and UPS – announce in the Fall timeframe what their price increases will be for the next year. This year both carriers announced that rates will increase 5.9%, which is a lower increase than the 6.9% increase each imposed on customers last year.
UPS’ new rates go into effect on December 26, 2023. As with the FedEx news, the company wants customers and prospects to focus on the fact that they’ve brought the price increase down.
But have they really? The headline says a 5.9% increase, but as past years have shown, these GRIs only show a small part of the picture. There are numerous fees, surcharges and changes to zones and dimension rates that don’t make the headlines, but do increase what shippers are paying in increases, well beyond the quoted 5.9%. In fact, in 2023, after the Reveel data science team analyzed the full impact of the rate increases on shippers it found that UPS customers were actually facing an increase of 10.2%. It is unlikely that 2024 will be any different.
For example, as a part of this announcement, UPS also released details on its peak season demand surcharges, which will be in effect from October 1, 2023 through January 13, 2024. A few quick observations:
- Similar to FedEx, the “additional handling” fee has more than doubled, going from $3.50 per package in last year’s peak season to $6.90 this year.
- Large package or oversize package charges have also increased dramatically, going from $40.00 per package to $74.90 this year.
- There is a new $410 per package charge for packages that are over the stated maximums as well.
The team here at Reveel is fast at work digging into all of the rate increases, changes, fees and adjustments that the two carriers have announced so we can bring you our annual rate guide, itemizing what the actual impact will be on your shipping budgets. 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.
This is critical information, especially if you’re a small or mid-sized business that depends on parcel shipping in order to operate every day. Hidden costs and increases can be the difference between profit and loss in the new year.
Stay tuned for the results of our full analysis once the 2024 rate cards have been released. In the meantime, don’t finalize your budgets or negotiate a new contract until you understand what these GRI announcements truly mean for your company.