2021 presented logistical challenges for businesses across the board. Rising inflation, shipping delays, and labor shortages are just a start to the laundry list of problems that created the perfect storm for an unpredictable shipping environment. And amongst the chaos, FedEx continues to pass on these challenges to their customers to pad their bottom line. But don’t worry, we are here to help. Let’s take a look at what is in store for 2022.
On January 3rd, 2022, FedEx will enact a general rate increase, or GRI, of 5.9% on all ground and air services. However, our data scientists have reviewed these changes, and found that shippers should expect to see much higher increases depending on the surcharges and minimums that FedEx is trying to sweep under the rug. To see how your business will be affected by these rate increases, download our Fedex Rate Change Guide to get informed.
In 2021 and 2022 forecasts, FedEx is servicing unprecedented levels of business. For the customer, this highlights a shift in the power dynamic, given FedEx is less concerned about customer retention. This enables carriers to raise rates and add fees at will. The table below gives a preview into FedEx’s general rate increases over the last 10 years.
|Year||FedEx Air||FedEx Ground|
On top of the 5.9% rate increase, there are a few unique changes to note this year. Here are some highlights:
So what does this information suggest?
There’s no getting around it—it’s a near guarantee that your business will be affected by these rate increases. While it’s unfortunate that FedEx continues to prioritize profits above all else, there’s something you can do about it.
Don’t be caught off guard. Tap into Reveel’s Shipping Intelligence® platform to:
Now that FedEx has published their base rates, Reveel is offering a free impact analysis using our Shipping Intelligence Platform and your unique shipping profile. Be sure to sign up for our Essential Edition (free) now and be ready to see what impact the General Rate Increases will have on your shipping expense when the increases go into effect on December 26, 2021.
With FedEx and UPS seeing greater demand for parcel shipment volumes than ever before there’s no question it’s a difficult negotiation climate; however carriers are making agreements. Now is the time for all shippers to negotiate their 2022 contracts. It’s never been more important to be informed and prepared in order to secure the best rates and terms.
With Fedex and UPS General Rate Increases right around the corner, Reveel’s Co-Founder and CEO, Josh Dunham, wrote an amazing article for Parcel Magazine that outlines the top strategies for a successful contract negotiation with your carriers. The piece takes into account the current market conditions influencing negotiations and how you can equip yourself, and your business, with the necessary information to negotiate your contracts with confidence in the ever changing world of shipping. Josh covers these critical topics:
· It’s crucial to negotiate more than ever
· Understand the carriers’ mindset going into 2022
· Know what is negotiable and what is not
· Audit your invoices
· Know your shipping profile
· Follow the money in your negotiation
· Negotiate surcharges aggressively for 2022
· Explore flat rate shipping options and negotiate capacity guarantees
To get the full spread, head over to page 16 in Parcel Magazine’s November-December issue to get informed.
It is right to assume that current market conditions are driving up the cost of shipping, but rate increases are nothing new to the world of shipping. In fact, UPS implements a general rate increase, or GRI, year over year. Let’s take a look at what this entails.
On October 28, 2021 UPS announced a 5.9% General Rate Increase on UPS Ground, UPS Air, and international services that will go into effect December 26, 2021. On top of the announced 5.9% increase, shippers should also be aware of the additional surcharges that are baked into the cake. Reveel’s data scientists did the number crunching and found that some industries could see substantially higher increases.
For an in-depth impact analysis of these rate increases and surcharges, be sure to check out our 2022 UPS Rate Increase Guide to get informed.
As mentioned, these rate increases are common practice for the large carriers and the increase of 5.9% on UPS Ground is the highest increase we have seen since 2013. The table below outlines the historical data on UPS rate increases over the last 10 years.
|Year||UPS Air||UPS Ground|
So now the question arises—what can you do to prepare for these annual increases?
There’s no getting around it—it’s a near guarantee that your business will be affected by these rate increases. While it’s unfortunate that UPS continues to prioritize profits above all else, there’s something you can do about it.
Don’t be caught off guard. Tap into Reveel’s Shipping Intelligence® platform to:
Now that FedEx and UPS have both published their base rates, Reveel is offering a free impact analysis using our Shipping Intelligence Platform and your unique shipping profile. Be sure to sign up for our Essential Edition (free) now and be ready to see what impact the General Rate Increases will have on your shipping expense when the increases go into effect on December 26, 2021.
Consider this: farm-fresh peaches delivered to your door in just two days, tasty pecans right in time for the holidays—all without a trip to crowded grocery stores.
That’s what you get when you order direct from Pearson Farm.
Based in Georgia, the Pearson family has been tilling the soil for five generations and perfecting their peach and pecan farm for over 135. Now it’s run by a husband and wife team, Lawton and Lanier Pearson.
While their mainstay is selling wholesale to grocery stores around the country, they also run an in-person retail store and a mail-order service to sell directly to their customers. While online sales had seen steady growth, 2020 saw an explosion in e-commerce sales.
That means shipping became a considerable expense. See how we saved them an additional $200,000 on shipping costs—during our second consecutive year of negotiations.
Pearson Farm sells peaches, pecans and baked goods from their website and ships them all over the country. But shipping peaches can be tricky. After all, the phrase “bruise like a peach” had to come from somewhere.
The peaches can’t touch each other, can’t get too warm, and have to reach their destination in two days. As you can imagine, this presents some unique shipping challenges for the Pearson team—and some costly price implications.
But until a partner introduced them to Reveel, the Pearson team didn’t know contract negotiations were even an option.
“We were at the mercy of UPS,” said Lanier. “We didn’t understand that there’s a whole world of negotiation available out there.”
Between 2020 and 2021, Pearson Farm doubled the number of peaches they sold directly to their customers. Even though they had just gone through negotiations in 2020, this put them in a good position to reopen the discussion.
Lanier stepped into a more active role in the company in 2020. Her expertise lay in all things peaches and pecans—not shipping. And like many business owners, she had to weigh whether it was a good use of her time to learn the intricacies of the shipping industry or if she should invest in help.
“To me, one of the most overwhelming and technically difficult parts of [the business] was trying to understand the UPS contract,” Lanier said.
Fortunately, another company introduced her to Reveel, and we were able to walk her through the negotiations process in detail.
“As someone who has no expertise and didn’t have anybody on staff who had any expertise in shipping, it was just a tremendous help,” said Lanier.
In addition to the savings they saw in 2020, this second round of negotiations resulted in another $200,000 in discounts. The Reveel team focused on reducing minimums, since most boxes were under ten pounds, and reducing the cost of second-day air, which Pearson Farm relied on to get fresh peaches to their customers around the country.
“Without Reveel, there’s just absolutely no way I could have gained that degree of knowledge in a short time and been able to accomplish that,” said Lanier.
Even when you’re the best at delivering fresh peaches to your customers’ doors, it helps to have every advantage you can muster.
“Our goal is to get fresh food to people at a reasonable price,” said Lanier. For Pearson Farm, that means offering free shipping for the customers for the first time in 2020.
Pearson Farm also provides fulfillment services to other businesses, and having lower shipping costs makes them even more appealing for potential partnerships.
The way Lanier puts it, she was a blank slate before working with Reveel. Now she has enough information to help her business succeed in the world of shipping, and she has Reveel for the deep industry knowledge needed to thrive.
How does Lanier sum up her Reveel experience? “Working with them was just a piece of cake.”
If you’d like to work with Reveel and save up to 30% on shipping, reach us here.
In 2019, we partnered with Nisolo and saved them 22% on their shipping costs through contract negotiations. Last year, we gave them early access to the Reveel’s Shipping Intelligence® Platform.
Besides creating luxury crafted accessories, Nisolo’s mission is to lead the fashion industry toward sustainability and more ethical practices. You can see it in their exceptional design and feel it in their mission to value the producer and the planet as much as the consumer.
To deliver on this vision, Nisolo works hard to minimize overhead. As an eCommerce retailer, it’s a challenge to keep shipping costs low.
Read on to see how Omari Whyte, Director of Operations at Nisolo, uses the Reveel platform to monitor their shipping spend, take action to lower their costs, and plan for business growth.
Shipping agreements play a significant role in overall shipping costs for eCommerce companies, and Nisolo is no different. Omari and the Nisolo team first reached out to Reveel to help them negotiate with FedEx and UPS and select the carrier with the best overall rates.
Now, with the platform’s Contract Analysis tool, Omari can quickly compare new offers to see if they’re worth further negotiations. Even though they do most of their business with FedEx, UPS reaches out every few months with a proposal to try and win their business.
“It’s usually a shell game,” said Omari. “The carriers will do better in some areas and worse in others that they’re unwilling to budge on.”
Now, Omari has access to quick information and can partner with his Reveel analyst to strategize Nisolo’s next move.
Not only does the platform make it easier for him to see the differences between contracts, but it also makes it easier to impart it to the rest of the management team.
Omari and the Reveel team spent the last round of negotiations focusing on their DIM divisor, and they got it to a pretty good place. By looking at their VitalFactors™ and their Reveel Peer Index™ (RPI), Omari identified their next point of focus: Minimums.
Using the “Minimums” Vital Factor Peer Comparison, Omari saw that their minimums were in the red zone (considered poor), so now he’s working with his Reveel account manager and FedEx to improve it.
Although this data might have been available to him with his old reports, he wouldn’t have seen the opportunity unless he specifically looked for it. Even then, he wouldn’t have had the peer comparison data to contextualize the number.
“It goes back to the peer index,” said Omari. “I could run that report, but I didn’t have the peer index to say if we’re on track or if we were missing the mark.”
Post-pandemic closures, Nisolo is experiencing a high-growth period. Between February and March of 2021, their business has grown 80% month over month.
As you can imagine, an increase in sales for an eCommerce company also increases shipping costs and other operational challenges. Omari can use data from the platform to create project models and create a long-term strategic plan.
One of the KPIs the platform provides is “Average Zone,” which tells you which zone(s) you ship to the most. Zones are relative to where you’re shipping from, and prices go up the farther your items travel.
For a quickly growing business like Nisolo, shipping zones can significantly influence future planning, especially when expanding production.
Growing out of their current footprint, Nisolo plans to expand their operations using a third-party logistics company. Adding locations presents an opportunity for them to lower their shipping costs—if they use their shipping data to select new locations.
Should they have just one location more centrally located? Do they split operations by coast? The answer to these questions can be informed by the data found in the Reveel platform.
“This information allows us to better think through that decision,” said Omari. Finding the answer to these questions would have taken much longer without it, he said.
So is the platform replacing any tools for our clients? Not really—but that’s because there aren’t any tools that do what the Reveel platform does.
Nisolo had a team member manually pulling historical data every Monday and putting it into a spreadsheet. Only then would Omari get usable information he could interpret and generate insights from.
Now, he can glance at a dashboard to see where to put his attention, get actionable insights harvested using machine learning, and then run detailed reports.
“I’m spending more time acting on the data as opposed to pulling the data,” said Omari.
This just scratches the surface of what you can do with the Reveel Shipping Intelligence Platform. The more you use the platform to actively manage your shipping contract, the more you can save.
The Reveel Peer Index™️ is a single metric that you can use to judge the overall success of your shipping. The RPI™️ is a number from 0 to 100 that compares your shipping health to your peers with a similar shipping profile to yours. Our advanced data science uses machine learning to mine millions of shipping data points for the best practices and rates and highlights where you can improve among your 6 VitalFactors™️.