Minimizing the Impact of New Carrier Surcharge Increases
As of January 1, 2024 both FedEx and UPS have implemented an average of a 5.9% increase across a range of their services which is 1% lower than the 6.9% increase we saw in 2023.
FedEx shipping rate changes saw all non-contract rates shipments which saw an average increase of 5.9%. Specifically, a $14.25 per package surcharge is applied to domestic package shipments which are classified as “Remote”. Learn more about FedEx’s 2023 ZIP code lists and additional shipping fees.
UPS saw its 5.9% average rate increase on December 26, 2023. Delivery area surcharges are already seeing a range between $3.95 and $7.70, whereas a $14.15 cost is seen in all states (excluding) Alaska.
So how can you manage GRI increases?
Find out how packing and packaging combined impact parcel spending and what you can do to manage these rate changes in coming years.
The new fee is a blow to many retailers who increasingly depend on ecommerce for the bulk of their sales, and have to contend with relatively tight margins and the demand for free shipping. In light of the capacity shortage and growing costs for carriers during the pandemic, these fees aren't terribly surprising. That doesn't make it any easier on shippers.
One way to reduce the impact of these new costs is to employ a cartonization solution that can account for them when it determines cost-efficient packing solutions. In practice, because the surcharge is per package this might mean different breakpoints for when it's cheaper to ship an order in one box or two.
Let's look at an example. There's an order I have to fulfill with 10 items of varying sizes. They fit snugly into 2 small boxes, or in 1 large box with a little room to spare. Before the surcharge takes effect, it might have made more sense to use the 3 small boxes to avoid the $0.50 dim fee on the large box. After the increase, I'm on the hook for an extra 90 cents if I choose the 3 small boxes again, making the large box cheaper.
That example may seem like an edge case, and while this one is completely made up, these are the kinds of savings opportunities that Paccurate routinely hunts down. We can tell you from experience that they add up very quickly.
If you investigate anything over the coming weeks, it should be whether you can already automate this kind of cost optimization. Or let us show you how Paccurate automatically factors surcharges and fees into its calculations, without getting in the way.
Learn more about how you can manage the impact of increased carrier surcharges and how to reduce transportation costs despite these changes.