UPS and FedEx are increasing rates by 6.9% for 2023. For FedEx, this is the biggest year-over-year increase in its history! UPS hasn’t increased its rates this much in over a decade! That's why we keep ending sentences with exclamation points!
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<<Deep breath. Stick to the facts.>>
The UPS rate increase is effective December 27, 2022.
The FedEx rate increase is effective January 2, 2023.
To be blunt, shipping with UPS and FedEx is going to cause some serious pain for a lot of companies in 2023. That is, unless you have a plan to offset the rate increases. This is one scenario where "no pain, no gain" DOES NOT APPLY.
Our Director of Development, Sandro, leads our entire software development team. So it's no surprise that he's been preparing for annual carrier GRI for decades. As he often says, "brace yourself."
**Editor's note: this post will be updated with additional analysis to give all shippers a better understanding of how the 2023 GRI will impact your overall shipping costs.
What is the UPS/FedEx GRI?
Annual rate increases aren’t anything new. UPS and FedEx both raise their rates annually. It’s a common practice known as the General Rate Increase, or GRI. And it's no surprise that the rate increase is the same for both carriers. This is the 6th year is a row that UPS and FedEx have announced an identical rate increase. This year just happens to be a BIG increase.
When UPS and FedEx plan the annual GRI, we're pretty sure it looks something like this:
Here’s the first thing you need to know about the GRI - it’s just an average and doesn’t take into account other costs like fees, surcharges and the specifics of your contracted discounts. That means that most businesses will actually see their shipping costs increase by 11 - 13%, NOT the 6.9% advertised by the carriers.
But if you're not prepared, the GRI can have an even bigger impact on your profit margins. We get it. Dealing with the GRI can be awkward. (See Sandro's pic above. Do we need to say more?) Lojistic can help you through this "phase." Keep reading, because we're here to help you out.
Now that you know what the GRI is, the next thing you need to look at is your existing contract, because your contracted rates are just one part of the overall equation. If you need help deciphering your carrier contract, we've got your back! Carrier contracts are confusing. That's all by design!
Typically, surcharges account for 20 - 40% of a shipper's overall costs. That's a huge amount! You can mitigate and manage the impact surcharges have on your shipping costs with Lojistic's Surcharge Summary analytic. Here's what it looks like: View Surcharge Summary analytic demo.
Keep in mind, your rates are going up in 2023, yet both UPS and FedEx still haven't reinstated your ability to recover refunds for late deliveries and other service failures. Your "guaranteed" services AREN'T guaranteed. UPS and FedEx have even restricted many customers from being able to pay invoices via credit card. The carriers claim that it's too costly for them to process credit card transactions. Huh, say what? All of this comes after nearly 3 years of historic profits and massive rate spikes.
The steep increase in rates comes after months of high seasonal shipping surcharges and fees. There's really no relief for UPS/FedEx customers. Especially if you're relying on your carrier for help. You need to take matters into your own hands. The reality is, there's a bunch of ways you can reduce your overall shipping costs. And Lojistic will show you exactly what you can do.
Here Are Some Key Takeaways From the 2023 GRI
- As we've seen over the last few years, both carriers continue to focus on margin improvements, especially on the short-zone, lighter weight packages. This is evident in the 7.9% increase for Ground, Zone 2, 1 lb. shipments (increasing from $9.36 to $10.10). Last year's minimum was 6.8%, for reference.
- Nearly all surcharges are increasing by more than 7%, and many are increasing by double digits. The biggest offenders are additional handling (11.5% - 18.8% increases) and oversize/large package (17.2% - 22.8% increases).
- UPS has rebranded Peak/Demand surcharges to “Demand” surcharges. They did a similar rebrand last year, but the underlying prediction is that Demand surcharges are likely permanent.
- Three-day rates have increased by approximately 10% with both carriers. This is a lesser used service, but this increase will have a big impact for some shippers.
Late fees for both carriers have increased. Make sure that you are paying on time. Lojistic offers a free service – ReadyPay – which can help eliminate or reduce late fees.
What Can I Do To Offset the 2023 GRI?
What is your plan for managing increased shipping costs? Create your free Lojistic account now to see your cost reduction opportunities. With Lojistic, you can decrease what you’re paying UPS, FedEx or any other carrier DESPITE IMPENDING RATE INCREASES. And Lojistic is free. Forever. PS - Here's the reason why we give our technology away for free. Mitigating the impact of surcharges, optimizing your use of Air vs Ground services, negotiating better rates, and more can all play a vital role in reducing the amount you're paying UPS/FedEx. With Lojistic, you'll also identify other operational efficiencies that'll help reduce expense for your business.
How Can I Measure the TRUE Impact of Rate Increases in 2023?
You can see the true impact that the GRI is having on your business with Compare Mode. Compare mode allows shippers to easily compare carrier performance and time periods. So, if you’re using more than one carrier you can see a side-by-side comparison for any given time period. If you're using only one carrier, you can compare performance - and costs - for different time periods. See Compare Mode in action here.
Lojistic’s rate experts are currently working on a comparison so you can get a better understanding of how the GRI will impact your business. You can see the past decade’s worth of rate increases with our report here: 2022 Rate Increase Report. We will be updating this report with information for 2023.
You can also check the carrier’s website for additional information.
- 2023 FedEx Rate Increases (Link to FedEx.com)
- 2023 UPS Rate Increases (Link to UPS.com)
Don’t wait for the 2023 FedEx rate increases and the 2023 UPS rate increases to take effect! Create your FREE Lojistic account today to control and reduce your shipping costs.
I Have Some Questions. How Can I Get Answers?
Questions about the 2023 GRI? We'd be happy to help answers any questions that you might have. Give us a call at 800-783-5753 or send us your questions here.