What Is the Difference Between GRI and PSS?

Written by Joe Jordan | Oct 28, 2023 1:18:09 PM

Just like many other aspects of the business world, logistics costs naturally fluctuate over time and across seasons. To stay profitable or even boost their profits, carriers often make adjustments to their pricing.

In this blog post, we'll explore two specific rate adjustments called GRI and PSS. So, if you've ever wondered, "What Is the Difference Between GRI and PSS?" – you're in the right place. We'll dive into what they are, how they influence your rates, and share strategies to reduce their impact on your business.

What Are GRI and PSS in Shipping?

GRI, which stands for General Rate Increase, refers to an annual rate increase implemented by shipping carriers. This increase is typically intended to boost capacity in response to the year-on-year increase in demand for shipping services. It is usually a percentage-based rate hike applied across the different service levels that a carrier offers.

On the other hand, PSS, or Peak Season Surcharge, now known as ‘demand surcharges’ represents additional fees imposed by carriers during periods of heightened shipping demand, such as the holiday season. PSS charges come in various forms and are determined by factors like shipment size and weight, shipping date, origin, destination, and more.

What Is Peak Season Surcharge in Shipping?

PSS shipping meaning: A peak season surcharge is an additional fee that a carrier adds on to your shipping costs during times of high demand (peak season). Peak season surcharges are a common practice in the shipping industry and serve to help carriers manage the challenges of increased demand while maintaining service quality.

Examples of Peak Season (Demand) Surcharges

Oversize Package Demand Surcharge: This surcharge applies when a shipper sends a package that exceeds standard size or weight limits. The fee compensates for the additional resources required to deliver such items during periods of high demand.
Additional Handling Demand Surcharge: This surcharge is levied on packages that require extra care due to irregular shapes, packaging, or fragility.
Residential Delivery Demand Surcharge: Applied during peak demand times, this surcharge accounts for the increased volume of residential deliveries, addressing the added complexity and resources required to serve individual homes when demand is high.

Peak season surcharge 2023: Check out UPS Demand Surcharges and FedEx Demand Surcharges for more details.

What Is a General Rate Increase?

GRI meaning: General Rate Increase, is an annual percentage increase in a carrier's prices. Its calculation typically takes into account various cost factors that have risen over the preceding year, such as fuel prices, labor costs, equipment maintenance, or regulatory compliance expenses. The carrier then passes on these increased costs to customers through the GRI.

Regulatory authorities oversee how carriers apply GRIs to ensure that consumers are well-prepared and protected from exploitation. For instance, the Federal Maritime Commission has established the following rules:

If a rate change leads to reduced expenses for the shipper, then it may take effect upon publication.
However, if a rate change results in increased costs to the shipper, it cannot be implemented until at least 30 days after its publication.

Factors Influencing General Rate Increase

Below are some of the reasons your carrier may announce a general rate increase this year.

Operating costs: Carriers can apply GRIs to offset increased costs of fuel, labor, and maintenance, among other resources.
Inflation: General increases in the price of goods and services in the economy can affect shipping prices.
Market demand: High demand for a carrier's services may give them pricing power, leading to GRIs, especially during peak seasons.
Supply chain disruptions: Events like natural disasters and strikes can cause a strain on delivery operations, prompting the carrier to address the challenges by implementing GRIs.
Regulatory changes: Changes in government regulations, taxes, or tariffs can impact operating costs and necessitate GRIs.
Competition: Competition with other players in the sector may cause a carrier to implement GRIs in order to maintain profitability and invest in improvements.

What Is the General Rate Increase for 2023?

Both UPS and FedEx have announced their rate increases for 2023 which take effect in 2024. Get the details below.

UPS General Rate Increase 2023

In September 2024, UPS announced an increase to its Daily Rates, to be effected on December 26, 2023.

Here's an overview of the anticipated changes detailed in the UPS 2024 rate increase announcement:

Rates for UPS Ground, UPS Air, and International services will go up by an average net of 5.9%.
UPS will make changes to the list of ZIP Codes to which Area Surcharges apply.
UPS will move some Zip Codes to different Zones.

FedEx General Rate Increase 2023

On August 29, 2023, FedEx announced new 2024 rates for FedEx Express, FedEx Ground, and FedEx Freight, to be effected on January 1, 2024.

FedEx Ground and FedEx Express Rate Changes

FedEx Express shipping rates for U.S. domestic, U.S. export, and U.S. import services will see an average increase of 5.9%.
FedEx Ground and FedEx Home Delivery rates will also experience an average 5.9% hike. FedEx Ground Economy shipping rates will also increase.
Additionally, there will be adjustments to surcharges and fees for both FedEx Express and FedEx Ground.
Starting January 1, 2024, FedEx is slated to increase customs clearance service fees for imports.

Check out the 2024 FedEx Express and FedEx Ground rates (PDF) for full details on the new 2024 FedEx rates.

FedEx Freight Rate Changes

FedEx Freight rates will see an average increase of 5.9%. This applies to various categories, including FXF PZONE, FXF EZONE, Offshore (comprising FXF 300, FXF 303, FXF 352, and FXF 370 series), and Commodity rates, which encompass pallet, volume, or truckload shipments.
Specifically, FXF 1000 and FXF 501 rates will undergo an average increase of 6.9%.
Furthermore, FedEx Freight rates will experience increases for FXFC 1100 (Intra-Canada) rates, FXFM DD (Mexico Door-to-Door) rates, and FXFM IMS (Intra-Mexico Shipment) rates.
There will also be changes to FedEx freight shipping surcharges.
It's worth noting that FedEx Freight box rates will remain unchanged.

What Is the Difference Between GRI and PSS in Shipping?

The following table highlights a few differences between GRI and PSS charges in shipping.

	General Rate Increase (GRI)	Peak Season Surcharge (PSS)
Definition	An annual or periodic rate increase applied across various services or products by carriers.	A temporary surcharge applied during specific high-demand periods.
Timing	Occurs at scheduled intervals (most times, annually).	Applied during specific times of the year, often during peak seasons or holidays.
Purpose	To cover rising operational costs, maintain profitability, or invest in improvements.	To address the challenges of increased demand during peak periods.
Duration	Long-term; remains in effect until the carrier decides to make rate adjustments.	Short-term; typically applies for a limited period, often a few months or specific weeks.
Customer Impact	Increased shipping costs for customers throughout the year.	Results in temporary cost increases for customers during peak seasons.

How ShipSigma Can Help

General rate increases and peak season surcharges, if left unattended, can substantially increase your shipping expenses, potentially disrupting your budget.

But when you partner with ShipSigma, you can breathe easy. Our team boasts over 150 years of combined industry experience, complemented by cutting-edge AI software that meticulously examines your shipping data to pinpoint cost-saving opportunities. Moreover, we provide white-glove service from negotiation to compliance. Get started today.

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