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2024 UPS & FedEx General Rate Increase

May 1, 2024

2024 General Rate Increase

By now if you ship with UPS or FedEx, you have seen the 2024 general rate increase (GRI) rear its ugly head. While both UPS and FedEx said the average increase is only 5.9%, down from 6.9% for 2023; if we peel back the onion this increase could be quite substantial for most shippers.

Both UPS and FedEx are penalizing shippers that use Next Day Air or Priority Overnight packages to short zones. A Zone 2 package for both carriers has an increase of at least 7.8% compared to 2023 prices. The further distance that the package travels, the increase comes down to around 6.4%. That it is still above the 5.9% GRI the carriers have stated in their press reports.

On the flip side 2^nd Day Air packages are carrying a rate increase of around 5.4% up to a Zone 4 which is up to 600 miles from the point of origin. On Zones 5 and above, the increases go up to almost 7.9%.

UPS and FedEx respectively have the same similar increase for their 3 Day Service. Shorter Zones have a 4.4% increase while the longer the package travels, then the increase goes up to almost 7.9%.

What This Means to Me:

What this tells me is that both UPS and FedEx are challenging their shippers to think very carefully before choosing what level of service they want to use. 2^nd Day Air Service is geared toward shippers that want to pay cheaper rates than overnight services, but also want their packages to arrive quicker than what the traditional ground delivery would take. So, if you are choosing 2^nd Day Air or 3 Day Select Services with UPS or FedEx for shorter zones, you are being penalized with a higher rate increase. Those packages should be shipped ground instead.

Ground packages for both carriers are taking on closer to the 5.9% GRI that they said was the average increase for 2024. As the packages get heavier and travel a longer distance is when shippers should see the increases grow to well over 6%.

Exporting packages to the UK, Canada or Mexico with both carriers will take on increases up 11% this year using Express Services options. FedEx was more generous with their increases to China and Japan than UPS on Express Packages. The increases are not as substantial if you are choosing a slower service that will take longer to get to its destination.

FedEx had larger increases for Import packages than UPS on packages coming from China, Germany, Mexico or Japan. FedEx shippers can see increases up to 12% on those Imports compared to 2023 for their Express Service levels. UPS was a little more generous with their Import increases on Express Service Levels. However, UPS did raise those Import Package Increases from China (our countries top Import Country btw) close to 8%.

Watch Out For Accessorial Charges:

Accessorial charges are another way for the carriers to make large profits off your packages. What are accessorial charges? Here are some of the common accessorial charges you see on your invoices. Residential, Delivery Area Surcharge, Additional Handling, and Address Correction. A lot goes into the accessorial charges. Such as Delivery Area Surcharges. There are different fees if it is shipped ground or air as well if it is shipped to a Commercial or residential address. Accessorial fee are increasing anywhere from 1% to up to 18.5% and everywhere in between. Accessorial charges are very tricky and that is just how the carriers want it.

What This Means For You:

If you are novice or just do not break down the UPS and FedEx rate increase and what it will mean for your company year over year, then you will find out quick enough when the carrier says an average rate increase of 5.9% that may not mean the same to you as it does the business next door. There are a lot of games the carriers play each year with their increases. They have all the analytics on their side to know what service level, weight breaks, and zones to increase the rates the most to make the best profit for their organization. Which is smart on their end. It is what every company wishes to do.

UPS and FedEx have always made it very difficult to figure out how their annual general rate increase will impact a business. They do not have the same playbook year over year. They are like a great offensive coordinator in the NFL. They are constantly switching things up to make it harder on the defense. In this case the defense is you the business that is shipping, and paying once again a lot more money to ship a package in 2024.

Reach out to us if you are interested in finding out more ways you can save on shipping.

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When to Use Parcel Contract Negotiations

November 18, 2024

When to Use Parcel Contract Negotiations Managing parcel shipping contracts is an essential aspect of modern logistics, particularly for businesses reliant on efficient and cost-effective delivery services. Whether you're a growing e-commerce company or a large corporation with complex shipping needs, understanding parcel contract negotiations can help optimize your shipping costs and improve overall operations. This article explains what parcel contract negotiation entails, its importance, when to seek expert help, and how services like Mindful Logistics can make a significant difference. What Is Parcel Contract Negotiation? Parcel contract negotiation is the process of working with shipping carriers to establish agreements on pricing, services, and terms tailored to your business's shipping needs. Major carriers like FedEx, UPS, and DHL typically provide standardized pricing structures, but businesses with substantial shipping volumes can negotiate customized contracts that better align with their requirements. Key Elements of Parcel Contracts Parcel contracts typically cover: Base Rates: The starting cost for various shipping services. Volume Discounts: Reduced pricing based on shipping volume. Surcharges and Fees: Costs for services like fuel surcharges, residential delivery, or Saturday shipping. Service Guarantees: Performance standards and penalties for delays. Accessorial Charges: Fees for additional services like handling oversized packages or address corrections. By carefully analyzing these components, businesses can identify areas where negotiations can lead to cost savings and improved service. Why Is Parcel Contract Negotiation Important? Parcel shipping costs can represent a significant expense for businesses. Without a well-negotiated contract, you may be overpaying or not receiving the most advantageous terms. Effective negotiation can impact your bottom line and competitive edge in several ways. 1. Cost Savings Carriers often offer discounts and incentives to secure high-volume shippers as clients. Negotiating these discounts can significantly reduce shipping expenses, improving profitability. 2. Customized Services Standard contracts may not suit your business’s specific shipping patterns. A tailored agreement ensures that the services provided align with your unique requirements, such as frequent international shipments or time-sensitive deliveries. 3. Transparency in Pricing Parcel contracts often include complex fee structures that can result in unexpected charges. A well-negotiated contract brings transparency, allowing you to budget accurately and avoid surprise costs. 4. Improved Carrier Relationships Negotiation provides an opportunity to strengthen relationships with carriers. By communicating your needs and expectations effectively, you can establish a collaborative partnership that benefits both parties. 5. Enhanced Service Guarantees Negotiations can include service-level agreements that hold carriers accountable for delivery timelines. This can help reduce the risk of delays and ensure reliable service for your customers. When to Get Help with Parcel Contract Negotiation While some businesses attempt to handle parcel contract negotiations independently, there are times when seeking professional assistance is the better choice. Experienced consultants can offer insights and strategies to achieve optimal results. 1. When You Lack In-House Expertise Parcel contracts can be highly complex, and understanding the nuances of carrier pricing models and fee structures requires specialized knowledge. If your team lacks the experience or resources to navigate these details, professional help can fill the gap. 2. When You’re Experiencing Rising Shipping Costs If shipping costs have increased without a clear explanation or corresponding increase in services, it may be time to renegotiate. Experts can analyze your current contract and identify opportunities for savings. 3. When Your Shipping Volume Changes A significant increase or decrease in shipping volume can affect your contract terms. Negotiating a new agreement that reflects your current needs can help you avoid overpaying or losing out on potential discounts. 4. When You Need to Expand to New Markets Expanding into international markets or launching a new product line can introduce new shipping challenges. Professional negotiators can ensure your contract supports your growth strategy by addressing cross-border shipping rates, customs fees, and more. 5. When Your Carrier Fails to Meet Expectations If your carrier consistently fails to meet service guarantees or if disputes over charges are becoming frequent, renegotiating your contract with expert guidance can help resolve these issues. How Mindful Logistics Can Help Navigating parcel contract negotiations requires time, expertise, and data-driven decision-making. Mindful Logistics offers specialized services to help businesses achieve the best possible terms with their carriers. 1. Comprehensive Contract Analysis Mindful Logistics begins by analyzing your existing shipping data and contracts. By identifying inefficiencies, hidden fees, and opportunities for improvement, they provide a clear roadmap for renegotiation. 2. Benchmarking and Market Insights With extensive industry knowledge, Mindful Logistics benchmarks your contract against current market rates and competitors. This ensures you’re not leaving money on the table and positions you for the best possible deal. 3. Data-Driven Negotiation Strategies Using advanced analytics, Mindful Logistics evaluates your shipping volume, patterns, and needs. This data informs negotiation strategies, allowing for personalized and effective discussions with carriers. 4. Access to Industry Expertise Mindful Logistics’ team includes professionals with years of experience in carrier negotiations. They understand the intricacies of shipping agreements and know how to counter common carrier tactics. 5. Ongoing Support and Monitoring Negotiation is just the beginning. Mindful Logistics provides ongoing support to ensure carriers adhere to agreed-upon terms. They also monitor changes in shipping trends to proactively renegotiate when necessary. 6. Customer-Centric Approach Mindful Logistics prioritizes your business goals. Whether you aim to reduce costs, improve service levels, or support expansion, their tailored approach aligns with your objectives. Conclusion Parcel contract negotiation is a critical component of effective logistics management, offering opportunities for cost savings, improved service, and operational efficiency. However, the process can be complex and time-consuming, particularly for businesses without in-house expertise. Knowing when to seek help is essential. Whether you’re facing rising costs, planning to scale, or navigating intricate fee structures, professional assistance can ensure you achieve optimal outcomes. Mindful Logistics is a trusted partner in this journey, providing expert guidance, data-driven strategies, and ongoing support to maximize the value of your parcel contracts. By working with Mindful Logistics, you can focus on your core business while leaving the complexities of carrier negotiations to the experts. Take the first step toward more efficient and cost-effective shipping by exploring how Mindful Logistics can help. Optimize your parcel contracts today to pave the way for future growth and success. Get Your Free Rate Analysis Here.

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