Big Ideas to Avoid Big Increases

You’ve heard the news: FedEx has announced a 6.9% general rate increase for Express, Ground and Home Delivery services. This is the most aggressive rate increase they’ve ever announced, and it goes into effect in sixty days.

In its last quarterly earnings report, FedEx reported a decline in both net revenue and in package volume. They are also anticipating a soft peak shipping season. These concerns and the push for higher revenue customers are driving the large General Rate Increase (GRI.) The general rate increase isn’t even the total story, as many surcharges will increase even more.  UPS is likely to follow suit with its own increases.

How much the 2023 FedEx GRI will impact your shipping costs depends on the specifics of how you ship. Some major announced changes include:

  • A large increase in costs for Express packages and Residential-related surcharges.
  • Aggressive increases for heavier, long-zone ground shipments. The Ground minimum is now over $10 for the first time.
  • Export rates, particularly Export Economy services, will rise sharply.

Reading about inflation in the news is no reason to accept what FedEx is throwing at you. Shippers are in a strong position to push back against these increases. The carriers are adding capacity while shipping demand is softening.

Here are some actions you can take to control this expense:

  • Gather your shipping data to estimate the bottom-line cost increase to your company.
  • Use data to make improvements to your company’s daily shipping operation
  • Review your FedEx contract to find additional savings.

To help our clients manage their small parcel expenses, Baker partners with TransImpact, the industry leader in small parcel advisory services. We’ll review your contract and provide step-by-step guidance so that you’ll save on today’s rates. And, when the increase hits, it will be applied against a lower cost basis.

The typical Baker client saves 15-25% on its FedEx or UPS parcel spend. The only fee for the service is a percentage of the savings generated.

Timing is good to push back – the carriers are no longer in a position of strength. Interested in hearing more? Call or email us anytime. We are here to help.

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