FedEx and UPS issue General Rate Increases(GRI) every year. Businesses have to prepare for rising shipping costs based on their shipping profile. Keeping this in mind, we would like to study the General Rate Increases (GRI) of these two premium parcel carriers for 2022. We will also look at the increase in surcharges and other additional charges of the two shipping carriers.
This article will help shippers understand the price changes in 2022 and choose the parcel carrier according to their needs.
Highlights of General Rate Increase 2022
General Rate Increase (GRI) gives shippers an estimate of the rise in base shipping rates. Depending on the contract negotiations with the parcel carriers, the impact on the shipments for shippers will vary. In addition, accessorial charges also increase every year. The shipping costs vary based on factors, such as distance/zone, dimensional weights, and more. So, our team at Audintel has identified three key highlights from the GRIs of 2022. Further, this comparison is for the United States domestic shipping rates and surcharges only.
A General Rate Increase at the service level
FedEx and UPS offer competitive rates for the domestic US shipping market. However, there appears to be a marked rise in the shipping rates, as seen in the below charts.
List rates of UPS and FedEx
The charts (Fig. 1 and Fig. 2) are for list rates, mainly focusing on 1-pound packages in zone 2. There are eight zones for US domestic shipping zones based on distance. As the distance increases, so do the shipping costs. The shipping list rates are calculated based on the weight of the packages and the shipping destinations. In this chart, UPS and FedEx Ground services show a ~6.8% increase in rates from 2021. Incidentally, parcels with a dimensional weight of more than 150 pounds appear to have a low rate increase.
Fig. 1: UPS 1lb daily rates for services in Zone 102(Next Day Air), Zone 242 (2nd Day Air AM), Zone 202 (2nd Day Air), Zone 2(Ground) for destination ZIP codes starting with 004-005
Fig. 2: FedEx 1lb rates for services in Zone 2
Minimum charge reductions as seen for UPS and FedEx
A discount for low-weight packages is possible with minimum charge reductions. It is known as “Minimum Net Charge” by UPS and “Minimum Package charge” by FedEx. Both parcel carriers, UPS and FedEx, offer minimum charges to their customers. Shippers having a large volume of shipments can negotiate for minimum charge reduction in their carrier agreements.
Fig. 3: UPS Minimum charges for packages
Fig. 4: FedEx Minimum charges for packages
Thus, negotiating for minimum charges with parcel carriers is vital for shippers. Our experts in Audintel help businesses negotiate minimum costs in their contracts. Contact us for further information on UPS and FedEx minimum charges.
Accessorial fees and surcharges
With the General Rate Increase announced each year, accessorial fees and surcharges increase annually. We see an increase in some vital surcharges, such as Additional Handling Charges, Delivery Area Surcharges (DAS), and Residential Surcharges. The impact of these surcharges affects the bottom line of shippers. In the case of UPS, an immense change in 2022 is the addition of Remote Area Surcharges for the lower 48 states. It is known as “US48 Remote Area Surcharge”. Earlier, the Remote Area Surcharge was for some zip codes in Alaska and Hawaii.
Fig. 5: UPS Surcharges
Fig. 5 of UPS surcharges indicates an increase in shipping prices zone-wise. In addition, it appears the introduction of Remote Area Surcharge for additional zip codes in the US will affect the profits of some businesses.
Fig. 6: FedEx Surcharges
For FedEx surcharges, our observation is that the Additional Handling Surcharge for zone 2 is less than the charges of 2021. Further, the oversize charges for zone 2 are less than the amount charged in 2021. This information is vital for businesses sending oversize parcels to zone 2. It is good news for shippers sending packages for short distances.
As seen in the above charts, the surcharge increase is due to Additional Handling Charges of packages. In addition, Large Package surcharges (UPS) and Oversize packages (FedEx) indicate the rise in price due to the size of the parcels.
Worried about rising shipping charges – let Audintel help you
Our intuitive audit platform provides innovative solutions to businesses. Audintel addresses the challenges faced by shippers. Our team aids shippers in reducing the impact of the steep GRIs, announced by shipping carriers. We help businesses to
- negotiate better deals
- receive discounts for services, surcharges
- choose the best-quality services of alternate, low-cost parcel carriers
Audintel supports shippers in reducing the shipping charges announced by shipping carriers with our contract negotiations services.
Closing Remarks
Choosing the ideal shipping carrier is difficult. In addition, different shipping carriers have various shipping pricing models that may confuse the shippers. Audintel’s team aids businesses to have a clear idea about the carrier agreements they are signing with the parcel carriers. Our aim is that shippers save money and garner profits simultaneously. So, learn about the impact of GRIs affecting your parcel delivery from Audintel. Reach out to our team at [email protected] or by visiting the Audintel website or call us at +1 (619) 354 8539.