2020 Carrier General Rate Increases: How will they affect your business?

by | Sep 26, 2019

3 min read

It’s that time of year again – time for the General Rate Increase (GRI), when major carriers like UPS and FedEx release their annual rate increases to keep up with inflation. So, you’ll just note the increase, adjust your budget accordingly and get back to work, right? Wrong.

Get specific to identify your real rate increase

What a lot of shippers miss is that the general rate increase is just that: general. Within that increase are surcharges and accessorials that will affect every shipper differently.

For instance, the FedEx general rate increase is 4.9%. But guess what’s going up by more than that? Specific service categories, like oversize packages, which will see the largest rate increase – up to 33.3% for home delivery.

You’ll also see additional handling surcharges for services like:

  • U.S. Express Package Services, U.S. Ground Services, International Ground Service (Weight) (20%)
  • U.S. Express Package Services, U.S. Ground Services, International Ground Service, International Express Package Services (Dimensional) (11%)
  • International Express Freight Services (5.7%)

And don’t forget address correction fees, dangerous goods fees, delivery area surcharge fees and many, many more.

How rate increases affect other areas of your business

The effects of the GRI don’t stop at your actual shipping costs – they ripple out to important areas of your business as well. To ensure you’re ready, you need to dive deeper into the widespread effect carrier rate increases can have on your business, including:

  • Cost of Goods Sold miscalculations – Applying the GRI to your COGS calculations and missing the details on the surcharges or accessorials that affect each item you sell could be an expensive mess.
  • Corporate-level budget forecasting issues – Do you want to go to the CFO and say you’re going to need more money mid-year because you didn’t realize exactly how rate increases would affect your costs? Probably not.
  • Operational challenges – Shipping costs don’t just affect your shipping department. Rate increases could indicate you need to make a change to packaging, your shipping policies, or other areas of your operations.

What to do about it

First things first: Get informed. Arm yourself with data on the 2020 carrier rate increases, your shipping profile and probably some coffee because you’re going to be at it a while – especially if you’re doing it manually or you’re not sure what rates will have the biggest effect on your bottom line.

If manual research and calculations aren’t your thing, you can also explore tools that allow you to apply the GRI and all the surcharge and accessorial increases to your specific shipping profile.

Get your business ready for the GRI

Shipping costs will always be on the rise, but that doesn’t have to mean your budget is ever-expanding as well. Get informed about your carrier’s GRI and other rate increases so you can analyze how they’ll affect your business. When you know what the specifics mean for you, you’ll be able to make the necessary adjustments to avoid surprises and keep your shipping costs under control.

 

Your Guide to Getting Ready for the GRI

Topics: General Rate Increase, Surcharges
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