At A Glance
With the end of January rapidly approaching, and many companies having already launched their annual initiatives for the new year, now is the perfect time to take a deep breath, and a good long look around. With that in mind, we here at Zero Down would like to point out some information that may have flown under your company’s radar so far this year: the 2022 GRI’s are here, and they deserve your attention. Now.
As the parcel carriers have done now for many years, towards the end of last year both UPS and FedEx announced they would be instituting a General Rate Increase for 2022. However, what many shippers may not have realized is that this year, the rate increases are substantially higher than in the prior years. For the last few years, the average (average, mind you) general rate increase for shippers of both companies was 4.9%. For 2022, that number has jumped up to 5.9%, an entire percentage point higher. Depending on your business’ unique shipping profile, it could be even more.
Here is a quick break down of just some of the rate increases for 2022 that stand out from both carriers:
1. UPS is Charging More at Both Ends of the Spectrum:
This year they have announced increases to large package rates, while also raising minimums, and more than even the advertised 5.9% on both types of packages. This means that if you’re not shipping a goldilocks style package that fits nicely in the middle of their rating system, you’re going to pay a premium for it.
2. Many Addresses Seem to be Moving Farther Away:
UPS also announced that they were reshuffling their Delivery Area Surcharge structure, and adding a Remote Area Surcharge as well. By just the number of zip codes on the move, the reshuffle is fairly innocuous, with a similar number of zip codes being added to the surcharges as are being removed from them. But by population density, it is clear that a vast number of addresses just got a lot more expensive to ship too.
3. FedEx Doesn’t Have Time for No-Shows:
With congestion and delays to supply chains all over the world these days, this one may not come as a surprise, but FedEx is announcing they will now start charging a No Shipment Tendered Surcharge for missed pickups. Hard to argue with this one, as containers and drivers are in such high demand right now.
4. FedEx is Adjusting to the E-Commerce Economy:
Also potentially coming as no surprise, with e-commerce dominating and changing the way businesses everywhere ship goods, FedEx has announced they will now start charging a Delivery and Returns Surcharge on items delivered via FedEx Ground Economy, but also that the surcharge will apply to items returned using the same service as well.
So, what does all this mean for your business? Remember, the publicized general rate increase of 5.9% is only an average, and for many shippers the actual hit to their bottom line could be much, much more. Here are three helpful strategies to try and prepare for these increases as best you can:
1. Packaging Analysis:
With both carriers raising minimums and cracking down on over-sized packages, it’s more important than ever to optimize the weight and dimensions of your goods. Understanding how to properly make an adjustment, even just an inch, to your packaging can end up saving your company massive amounts of money.
2. Network Analysis:
These days, the ability to create global supply chains that can literally reach customers anywhere in the world is remarkable, but, as a wise man once said, ‘With great power, comes great responsibility.’ Optimizing the location of manufacturing plants, warehouses, and distribution centers, according to your specific shipping profile, can revolutionize the efficiency, and savings, of your company’s logistics network.
While the carriers have every right to raise their rates, you also have the right to negotiate a better agreement with them. Even if your shipping profile hasn’t changed dramatically since your last negotiation, the marketplace has, and now is the time to re-evaluate that old agreement and see if it still works for you. Chances are, there are savings to be found, and the right partner can help you figure out where to look.
There’s no time to wait. These rate increases are hitting you and your business today, even if you don’t realize it yet. The sooner you implement strategies to stop profits from leaking out of your supply chain, the more competitive you’ll be, and the better you can serve your customers.
Rates do go up, but that doesn’t mean your costs have to. If you’re ready to start saving money, instead of losing it, reach out to us for a Free Demo today.