Reveel announced the results of its analysis of the 5.9% general rate increases (GRIs) unveiled by FedEx and United Parcel Service (UPS) for 2024. Reveel's analysis is designed to provide shippers with an accurate view into how their shipping outlays will change in the coming year.
To determine how American businesses' real parcel shipping costs will be impacted, Reveel's data scientists created a model that applied the new GRIs and the numerous new surcharges, additional fees, and rules not included on either carriers' rate card to millions of shipments made in the previous year, and then calculated the corresponding difference in cost to show much shipping costs on average will change if the same shipments were made again in 2024. Reveel's modeling and simulation technology goes well beyond basic spreadsheet analysis by modeling every package based on the actual contract it was shipped under.
Reveel's analysis found that although FedEx and UPS again introduced an identical GRI of 5.9% for 2024, American businesses are again looking at far more substantial shipping cost increases than either carrier's rate card shows. Specifically, Reveel's analysis found that:
The average FedEx customer will pay 8.17% more in 2024 than they did last year; and
The average UPS customer will pay 7.72% more in 2024 than they did last year.
"Although the real-world cost increases the vast majority of shippers using FedEx and UPS will incur in 2024 are lower than the dramatic money grabs we saw in 2023 and 2022, these are still significant cost increases that will prove problematic for many businesses in light of macro-economic trends," said Josh Dunham, co-founder and CEO of Reveel. "It is absolutely imperative that shippers consider how the new rules, surcharges and fees on tap for 2024 from FedEx and UPS will impact their businesses."
Reveel's previous analyses for both carriers' 2023 and 2022 GRIs illuminated an even more dramatic disparity between the published rate card increases and real-world cost increases aimed at shippers in the form of new rules, surcharges and miscellaneous fees:
For the 2023 GRI, the highest ever – Reveel's analysis of the 6.9% increase introduced by both FedEx and UPS found that on average businesses using FedEx would pay 12.8% more than in the previous year, and businesses shipping with UPS would pay 10.2% more than in the previous year if they made the same shipments.
For the 2022 GRI, Reveel's analysis of the 5.9% GRI introduced by both FedEx and UPS found that on average businesses using FedEx would pay 9.1% more than in the previous year, and businesses shipping with UPS would pay 10.2% more than in the previous year if they made the same shipments.
"For decades FedEx and UPS have benefited from their ability to increase their prices and profitability with fees and surcharges that are government by complex, fine-print details in shipping contracts and an ever-changing litany of new rules that were nearly impossible for most businesses to track, let alone monitor proactively," adds Dunham. "Advanced data science lets shippers not only bring transparency to these hidden price increases, but also enables them to proactively get in front of them and use actionable insights to make decisions that enable them to immediately save money."
Some of the new rules and fees introduced by both carriers will also be particularly problematic for some companies, including UPS's changes in how surcharges are applied to some zones and FedEx's increased address correction surcharges. As in past years, many of the higher fees also are aimed at oversized or heavier parcels, with businesses that ship furniture, sporting goods, automotive parts, industrial supplies and other larger items being particularly hard hit.
Shippers' options to address the 2024 GRIs are significantly better this year than in 2023.
Despite the significant parcel shipping costs increases businesses face from FedEx and UPS in 2024, the outlook for shippers now is far more favorable than at any point since the pandemic caused a dramatic increase in e-commerce shipping volume that stressed the capacity of carriers' networks and empowered them to walk away from business.
"Over the past two years, shippers who approached their carrier negotiations with data and insights were still able to gain concessions, but they were nuanced and highly targeted given the willingness of both carriers not only to introduce additional increases, but also cut long standing customers loose in favor of a better, not bigger strategy," added Dunham. "Today, the shipping environment is very different, with both FedEx and UPS showing their willingness to negotiate more aggressively to keep or gain market share. These are the most favorable carrier contract negotiation conditions for businesses and their shippers we have seen in many years. We're seeing our customers secure far better rates, terms and conditions."
Dunham encourages shippers to negotiate their 2024 shipping contracts with a keen understanding of their business' shipping vital factors – service spend, surcharge spend, average cost per shipment, minimum charges, shipping weight and average zone – in hand. Particularly fertile areas to focus on include surcharges and minimums. Shippers should also be prepared to determine if the many concessions carriers offer in response will actually benefit their business.
Shippers are invited to demo Reveel's Shipping Intelligence™ platform, a SaaS-based analytics, contract analysis, and negotiation solution that empowers shippers to apply Active Shipping Management to their operations, to learn how the 2024 GRI will impact their specific shipping profile with a free 2024 GRI Impact Analysis. Shippers are also invited to download Reveel's 2024 GRI Rate Guide to learn more about Reveel's analysis.
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