Analysis: The Impact of the FedEx and UPS Annual Generate Rate Increases on U.S. Businesses Will be More Nuanced This Year
Wednesday, December 11, 2024
This year's edition of Reveel's complimentary GRI Guide breaks down a changing parcel shipping landscape that will require businesses to be more strategic to keep their costs in check
IRVINE, Calif., Dec. 3, 2024 /PRNewswire/ -- Reveel, the only Shipping Intelligence(TM) Platform with Parcel Spend Management 2.0 (PSM 2.0) technology, today released its analysis of the 5.9% annual general rate increases (GRIs) FedEx and United Parcel Service (UPS) each unveiled for 2025. Reveel's analysis is designed to help shippers get a better sense of how shipping costs for their businesses will be impacted in the year to come.
"Businesses that sell online or depend on the fast delivery of supplies increasingly appreciate the impact that parcel shipping performance has on revenue," said Josh Dunham, CEO, and the co-founder of Reveel with Chad Beville in 2006. "Historically, the annual GRIs have been problematic for shippers because they merely indicate the increase carriers make on their published rate cards, and do not reflect the many less visible levers they have to increase their revenue-per-package. This includes new rules for zones and parcel dimensions, new fees and changes to surcharges - all of which can dramatically impact shipping costs."
Notably, most companies have limited visibility over parcel shipping spend, let alone the ability to proactively control it. This is because each shipment is in effect an ad hoc event impacted by many constantly changing variables - including the aforementioned new rules, fees and surcharges. There is also no data normalization across carriers, making the traditional business intelligence solutions ubiquitous in business today ineffective.
Reveel's Shipping Intelligence Platform upends this dynamic. Using powerful AI and its PSM 2.0 technology, it puts intuitive dashboards and real-time shipping data at shippers' fingertips and provides real-time actionable insights they can use to immediately save money.
To determine how American businesses will be impacted by the new GRIs, Reveel's data science team used advanced models to apply the new rates and numerous new surcharges, rules and fees introduced throughout the year to the millions of actual shipments businesses made on Reveel's platform under the previous rates, terms and conditions. The resulting package-level analysis provides a real-world, apples-to-apples, year-over-year comparison of shipping costs.
The 2025 GRIs from FedEx and UPS - A Significant Shift From Recent Years
The analysis in Reveel's 2025 GRI Guide points to a rapidly changing parcel shipping landscape that on some levels is even more complex. For the first time in years the actual increases shippers will face is relatively close to the 5.9% GRI. More specifically, on average:
-- UPS customers that ship the same items they did last year will see their
costs increase by an average of 6.3%. Some may still see increases of
12- 16% due to their shipping profiles.
-- FedEx customers that make the same shipments will see their real costs
increase by an average of 7.0%. Some may still see increases of 12-16%
due to their shipping profiles.
This marks a dramatic shift from previous years when there was significant deviation between the published GRIs and the actual increases most shippers incurred once variables not on the rate card were added in. On one level, this is not surprising. Shipping volumes have decreased in many sectors and both FedEx and UPS are again intent to gain market share and more apt to negotiate better rates - a far cry from several years ago when either carrier was willing to walk away from business.
There is also an important caveat to consider. Both carriers steadily increased their costs throughout the year, particularly for heavier or bulkier items. In this respect, the 2025 GRIs and the many unpublished new rules and fees associated with them and unveiled this year are a step closer to the dynamic pricing strategies carriers want.
Some of the many noteworthy considerations shippers and businesses should keep in mind that are detailed in the 2025 GRI Guide include:
-- For FedEx customers: FedEx customers will be particularly hard hit if
they have a point of origin on the East or West Coast, heavily utilize
2-day or 3-day services, have an average parcel weight of ten pounds or
more, or if surcharges exceed 20% of their total shipping spend;
-- For UPS customers: UPS customers will be particularly hard hit if they
have often rely on 2-day or 3-day services - especially on 3-day
services used for packages that are less than 5 lbs. - or if surcharges
exceed 20% of total shipping spend;
-- The 2024 peak season will be longer and more expensive: Both UPS and
FedEx focused on the restructuring, increase and extension of demand
surcharges.
-- Forget about charging it: UPS began assessing a 2% surcharge on all
invoices paid via credit card on Oct. 21, 2024;
-- Big is the new bad: Additional handling and large package surcharges
take center stage in 2025. Over the past two years, FedEx and UPS
effectively doubled large package and oversize surcharges. Those costs
will increase by 21-29% percent in the year to come depending on size,
service level, zone and carrier;
-- Cities are the new "remote": Delivery Area Surcharges (DAS) will
increase an average of 6-7% for both FedEx and UPS. Notably, DAS now
include some of the most densely populated metropolitan areas despite
the fact that it was initially associated with remote areas; and
-- Previously-negotiated fuel surcharge discounts are running on empty: As
the base rates for fuel surcharges climb, the effectiveness of
previously negotiated discounts diminishes, a trend that's even more
striking given that fuel prices are decreasing in many areas.
"This year, it's imperative that shippers play close attention to their unique shipping profile and proactively respond to changes that have the potential to dramatically impact their costs," added Dunham. "Whether it's comparing carrier contracts, designing new packaging, determining what kinds of incentives can be offered to e-commerce customers in the form of discounted shipping, or effectively managing a multi-carrier strategy, knowing the details and acting on them will be key in 2025."
A free copy of Reveel's 2025 GRI Rate Guide is available here. Shippers are also invited to sign up for a free demo of Reveel, try a free version of its platform, or contact one of its parcel shipping experts and veterans of the parcel shipping industry to learn more.
About Reveel
Reveel is the leading Parcel Shipping Intelligence(TM) Platform that brings transparency to the parcel shipping market, leveling the playing field, and enabling shippers to optimize their parcel shipping spend. Its unique technology empowers shippers to break free of expensive parcel shipping consultants with an easy-to-use software app that brings transparency to the black box of carrier agreements. With over 17 years of parcel agreement management expertise and over $2B in parcel spend under management, the company's SaaS app provides actionable insights to make smarter business decisions and give shippers peace of mind. Reveel empowers customers to leverage the power of data science to capture significant ROI. For more information, please visit the company's website and follow it on X, LinkedIn and Facebook.
Media Contact:
Ken Phillips
Guyer Group for Reveel
P: 781.291.5664
E: reveel@guyergroup.com
View original content:https://www.prnewswire.com/news-releases/analysis-the-impact-of-the-fedex-and-ups-annual-generate-rate-increases-on-us-businesses-will-be-more-nuanced-this-year-302320706.html
SOURCE Reveel
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