FedEx has announced a GRI of 5.9% set to begin on January 1, 2024. When you see the coming increase is lower than previous years, it doesn't seem like something to be too concerened about, but what can be revealed by taking a deeper dive into the price increase?
We'll cover:
Domestic Services and changes to expect
Common Surcharges and changes to expect
Alterations to Minimums
Reccomended calls to action
Domestic Services
The good news this year is that most domestic services will see a smaller increase in 2024 than was seen in the past two years. Take a look at the below chart which displays the Percentage increase of each domestic service over the last three years:
SurchargesÂ
In 2024, the FedEx GRI will bring an average increase of 12.3% across all surcharges. Some common surcharges like Delivery Area Surchage (DAS) and Residential Surcharges (Home Delivery) are only seeing increases of 5% to 8% this year. Other surcharges like Additional Handling and Oversize Surcharges are increasing by double-digits and landing right around a 20% increase.
See below the noteworthy increases to common surcharges:
Minimums
What good is a pretty house if it's not sitting on top of a good foundation? Like surcharges, Minimums can be the attack from behind that we least expect and can increase our overall rates. Like last year, the Next Day services (Priority and Standard Overnight) minimums are higher. If your contract with the carriers does not include some type of rate cap, minimums can drastically affect your overall cost per package. Something to make note of is that over the last 5 years, many minimums are up as much as 30% to 40%.
See below the 2023-2024 increase to minimums:
Takeaways and what you can do
Again, even if your contracts have a rate cap clause in it, the clause does not cover or include surcharges and while the GRI seems to be lower than last two years, your exposure to surchagres will continue to increase your overall costs. Let's not forget that the increase to surcharges ARE NOT included in the 5.9% announced by FedEx (the increase only outlines what is happening to the base rates).
Our reccomendation and call to action: Parcel shippers need to understand the big picture and that building a shipping budget for 2024 takes diving into the finer details. This is the only way you can truly fight to get releif that specifically impacts your shipping profile and can help you manage your overall costs. The carriers are hungry for parcel volume whether to retain it or to win it and the time to renegotiate your contract has never been better.
You can find the full FedEx 2024 GRI Announcement here: https://www.fedex.com/en-us/shipping/rate-changes.html
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