The largest general rate increase (GRI) for carriers is taking effect December 2022 - January 2023 across the country. This includes UPS (6.9%), FedEx (6.9%), Forward Air (5.9%), LaserShip / OnTrac (6.9%), and many more. To make matters worse, that percentage is just an average. Some fees and surcharges could see an increase of over 20%. This has you begging the question, why are shipping costs so high? The answer, these carriers are working hard to increase profit while decreasing volume. However, these rate increases can be reduced through invoice auditing, carrier contract negotiation, and other savings solutions. But before we get into that, let’s break down this GRI.
The largest general rate increase (GRI) for carriers is taking effect December 2022 - January 2023 across the country. This includes UPS (6.9%), FedEx (6.9%), Forward Air (5.9%), LaserShip / OnTrac (6.9%), and many more. To make matters worse, that percentage is just an average. Some fees and surcharges could see an increase of over 20%. This has you begging the question, why are shipping costs so high? The answer, these carriers are working hard to increase profit while decreasing volume. However, these rate increases can be reduced through invoice auditing, carrier contract negotiation, and other savings solutions. But before we get into that, let’s break down this GRI.
Effective December 27, 2022, UPS customers will experience the following:
Packages Rates increase 6.3-8.5%, dependent on zone distance
Increase to express and ground fees & surcharges including but not limited to:
Additional Handling – 17.5% increase
Residential Delivery – 9.4% increase
Large Package Surcharge – 22.7% increase
Increase in late payment fees from 6% to 8%
Long term Demand Surcharges to replace temporary Peak Surcharges
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Effective January 2, 2023, FedEx customers will experience the following:
Rates increasing exponentially by zone distance
Increase to express and ground fees & surcharges including but not limited to:
Additional Handling – 17.5% increase
Residential Delivery – 8.4% increase
Ground Unauthorized – 12.2% increase
Effective January 30, 2023, FedEx customers will experience the following:
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Effective January 22, 2023, USPS customers will experience the following:
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Now that we understand the rates, let’s get into the savings.
For the best savings, we recommend taking a multi-tiered approach. Here are four ways that you and your company can work to decrease your shipping charges and put that money back in your pocket.
Audit Your Invoices - Auditing your invoices is an incredibly important step for contract compliance with your shipping partners. It allows you to see a clear picture of late deliveries, lost packages, invalid surcharges, and more. The three ways you can go about auditing your invoices are as follows:
Manual Audits
This is your least expensive auditing solution, but your most time-consuming and potentially costly option. While a manual audit can be done in simplistic cases, the process can quickly become complex and prone to human error often losing the company money in the long run.
Parcel Audit Software
Parcel Audit Software can be purchased and managed by your staff in-house. This software will help your team track payments, gather data, and organize invoices. It is more accurate than a manual audit, but oftentimes just as time-consuming due to manual entry and software management.
Third-Party Parcel Audit Services
Hiring a third-party auditing service will have more upfront costs but will save you money over time. A good parcel audit service will have the automated technology to not only process the data but analyze the information to provide key performance indicators and actionable insights, saving you time and money.
Negotiate Your Shipping Costs - Because of the carrier duopoly between UPS and FedEx, it can be tricky to identify a fair parcel shipping rate. With the right data to back you up, you can negotiate shipping costs based on what your optimized contract should be. We recommend working with a contract engineering company to identify cost reduction opportunities and help you navigate these conversations.
Reduce Your Package Sizes - When it comes to shipping costs, size matters. The heavier, larger, or more oddly shaped the package is, the more it’s going to cost. So, if you can, reduce your package size, weight, and DIM to help with savings.
Use Multiple Carriers and Service Levels - When comparing carriers, you’ll find variances in the standards for package dimensions, weight, delivery locations, delivery times, and specialty boxes. We recommend diving down the supply chain rabbit hole to identify which carrier(s) and service(s) are right for you. You’ll likely find that there is more than one answer. For example, UPS may have better ground rates, while FedEx has better air rates. You may learn that you’re shipping everything air when you could ship ground for 60% of the price and the same delivery date. The options and combinations are endless.
Regardless of which suggestion you start with, we recommend combining all four to see the greatest impact. At ShipSigma, our mission is simple. We’re here to save you money. Using your own data with our technology, we offer detailed and specialized insight into your specific shipping costs. We take your raw invoice data and layer on the cost of the carrier to service your account as opposed to benchmarking - this allows us to see all of the data that is outside of your view. We’re not better negotiators; we’re just backed by AI-driven technology that allows us to see live market data. What’s the result? You can see exactly how much you’re saving — package per package.
Within a month of partnering with us, you’ll see visible, meaningful results from our services. We will provide you access to detailed reports with tracking-number-level details to know exactly how much money you’re saving, down to the penny. Ready to start saving? Connect with us today.