27 Sep Carrier GRI Analysis – Get Insights On Freight + Parcel Rates
Carrier GRI analysis is an essential service offered by SSI for supply chain, operations, logistics, shipping and finance executives.
As shipping rates vault to all-time highs, it is vital you obtain a clear picture of how your carrier’s GRI will impact next year’s freight spend. Unfortunately, a GRI is truly “general” – at best it is a ballpark estimation of how base rates will increase for all the carrier’s customers across all lanes. As with most general disclaimers, your results may vary. In fact, you may be surprised at how much higher your rates will actually rise.
TRUCKLOAD AND LTL SHIPPERS ARE IN FOR A SHOCK NEXT YEAR
75% of truckload carrier leaders are anticipating at least a 5% increase in rates of 2022. However, only half of shippers are expecting rate increases that high. Why are the carriers so confident? Because even after mid-teen percentage increases last year, capacity remains tight.1
In fact, the freight transport market is booming. Just last month, Old Dominion saw a 17.3% increase in LTL shipments year-over-year while recording a daily revenue increase of 29.1% in the same timeframe.2
Unfortunately, with demand high and capacity packed, the carriers are in the proverbial driver’s seat before you even get to the negotiating table. Most shippers know they need to lock in contract rates, because there really is no telling how high LTL spot-market rates will rise next year. However, before you sign on the dotted line, we can provide you with precise data on what the proposed rates actually mean to your business.
FEDEX DELIVERS A JOLT – PARCEL SHIPPERS WILL PAY THEIR HIGHEST RATES EVER
According to a recent Wall Street Journal article, shipping rates are rising faster now than they have in nearly a decade. FedEx recently announced rates will increase in January by an average of 5.9%. Of note, the 5.9% GRI announced by FedEx is 20% higher than last year. UPS is expected to make a similar GRI announcement in the coming weeks. Industry analysts say the carriers are bullish and confident they have uncommon leverage to squeeze higher margins out of their customers next year.3
An article in Chain Store Age reveals additional details about the new FedEx rates. The 5.9% GRI will impact shippers that use FedEx Express, FedEx Ground and FedEx Freight and will go into effect on January 3, 2022. The rate will apply to all US domestic, US export and US import services.4
On top of the GRI announcement, FedEx announced a number of other cost increases for their customers.
- The FedEx Ground minimum is changing from $8.76 per package to $9.36 per package, an increase of 6.8%. It is not unusual for this Ground minimum increase to be higher than the base rate increase, which is why SSI advises clients to pursue discounts for the former as well as the latter.
- High-volume residential shippers will trigger a residential surcharge when they hit 25,000 packages next year rather than the current threshold of 30,000 packages. Remarkably, shippers will pay $0.60 per package for this surcharge, a 100% increase, beginning January 17.
- FedEx is also making an adjustment to its fuel surcharge table trigger points on November 1, resulting in a 1.75% fuel surcharge price increase for both its U.S. Express and Ground services.
- New additional handling and oversize surcharge calculations will go into effect on January 24.These surcharges are changing from flat fees to zonal ones. Depending on how far packages ship, it could wind up costing you up to 38% more than you are currently paying.
As you can see, there are many higher charges to absorb. Further, the new surcharge dates often do not align with the January 3 GRI date, which will inevitably create confusion for many shippers.
Official details related to rate changes, surcharges, and fees are available on the FedEx website.5 However, to understand how all these changes will truly impact your business, we urge you to reach out to our veteran parcel experts and analysts to receive an SSI parcel carrier GRI analysis.
WITH AN SSI CARRIER GRI ANALYSIS, YOU SEE THE TRUE IMPACT OF NEW RATES
For most shippers, determining for themselves the actual cost impact of each of their carrier GRIs is confusing, complicated, and time-consuming. In fact, many intelligent people make the mistake of underestimating how a general rate increase will impact their business. With SSI you will receive a real-world understanding of how a GRI will increase your freight spend.
Our industry experts can create for you an accurate parcel carrier GRI analysis as well as a TL/LTL freight GRI analysis upon request. By analyzing your historical carrier data, our reporting will provide you with great clarity on how a new rate schedule will increase your freight spend. Of course, if you need us to analyze other modes of transportation, or if you would like us to drill down only on specific trade lanes, we can handle that for you as well.
Further, SSI carrier contract negotiators are available to help you spend less than other shippers that simply “grin and bear it” as they accept the GRIs at face value and then suffer the consequences.
CARRIER CONTRACT OPTIMIZATION SERVICES
- Save by working with our professional carrier pricing managers
- Leverage our deep experience in contract administration
- Receive actionable rate impact mitigation measures
- Gain insights from world-class analytics that help you maximize shipping efficiencies
As a part of our comprehensive review of your shipping requirements, our skilled team will identify areas that represent opportunities for freight and parcel savings, offer authoritative advice on contract negotiations, and mitigate year-over-year rate increases. SSI will empower you to fully optimize your carrier contracts.
CONTACT SSI FOR EXPERT CARRIER GRI ANALYSIS
Gain a competitive edge by being well informed and armed with data insights so you can negotiate optimal carrier terms based on your own business needs, not the carrier’s profit objectives.
Contact SSI to connect with one of our carrier GRI analysis experts today.
Footnotes:
1. Todd Maiden, Finance Editor “Up 5% may not be enough for truckload rates in 2022”, September 15, 2021, as published by FreightWaves.
2. Jim Stinson, Senior Reporter, “Old Dominion update indicates LTL is off like a rocket in Q3”, September 10, 2021, as published by Transport Dive.
3. Paul Ziobro, “FedEx, UPS Rate Rises Are Making Online Shopping More Expensive”, September 20, 2021, as published by The Wall Street Journal.
4. Marianne Wilson, Editor-in-Chief, “FedEx shipping rates to increase”, September 21, 2021, as published by Chain Store Age.
5. FedEx Shipping Rates – Overview: https://www.fedex.com/en-us/shipping/current-rates.html.