01 Nov Shipping Cost Management Services Deliver Big Savings
SSI shipping cost management services are time-proven and if you act now, they will deliver substantial parcel and freight savings throughout the year ahead. Parcel carriers have announced their 2025 general rate increases (GRIs) and the freight transport companies will soon do the same.
This blog post will cover important details you need to know about GRIs and surcharges, how they might affect your business, and explain the money-saving benefits of our GRI cost impact analysis services.
In addition, you will learn of several other SSI cost-management services to mitigate next year’s shipping cost increases. These include our renowned freight audit and freight payment services, as well as freight benchmarking services, carrier contract optimization services, and freight data analytics services.
CARRIER GRI COST IMPACT ANALYSIS PROVIDES MUCH NEEDED CLARITY
A General Rate Increase (GRI) is a rise in a carrier’s base shipping rate that applies to all shipments, regardless of the service or class of service. Our parcel and freight GRI cost impact analysis answers the question: How much is this GRI really going to cost me?
Typically, GRIs grab the headlines and carrier account managers tend to promote the GRI to their clients. Yet, in most cases, it is the poorly publicized changes in carrier surcharges that will take a bigger bite out of your budget.
Unfortunately, the vast array of fees, surcharges, zone charges and other accessorials that carriers tack onto a GRI makes it difficult for shippers to know the real-world impact of these costs. As a result, many intelligent people make the mistake of underestimating how a general rate increase will affect their budget and business.
While most high-volume shippers have parcel carrier contracts, the discounts they receive are often negotiated off of the base rates. So, whatever you are paying today, you can be sure the carrier plans to raise your rates next year.
Contact SSI to get a real-world understanding of how GRIs and higher surcharges from each of your carriers will impact your total freight spend. Well informed and armed with data insights, you can negotiate terms based on your own business needs, not the carrier’s.
PARCEL GRI COST IMPACT ANALYSIS
UPS & FedEx have each announced a 5.9% GRI for 2025, matching last year’s figure.
The FedEx rate increase will go into effect on January 6, 2025 and raises the standard list rates for all US deliveries, as well as exports and imports.1
However, FedEx customers must be wary of the 5.9% figure. Those who ship long distances (especially Zone 5 and higher), and those who ship to less-populated areas will pay a much higher Delivery Area Surcharge (DAS). Further, those who ship large packages will see a whopping 26% (or higher) increase in additional handling and/or oversize fees.2 Ouch!
The UPS rate increase goes into effect on December 23, 2024, two weeks before the FedEx date. This will certainly boost last-minute, holiday-shipping revenue for UPS, at the expense of customers already paying hefty peak-season demand surcharges. Certainly, the pre-Christmas, “bah-humbug” timing appears audacious. Yet, to those who object, UPS may counter they are hiring 125,000+ seasonal workers and that labor is expensive.3
The UPS increase applies to all ground, air and international shipping services. However, the actual impact for each UPS customer will vary depending on package weight and size, delivery distance, services used and other characteristics.4
For most shippers, understanding precisely how the various FedEx and UPS rate increases and surcharges will impact your budget next year is mind-boggling. This year, both carriers have provided aggressive discounts to keep customers or attract new ones. Yet, these carriers have also made adjustments to fuel surcharge tables throughout the year, leading to surcharge-cost increases even when fuel prices were declining. According to the most recent TD Cowen/AFS Freight Index, since 2021, ground fuel surcharges have skyrocketed 77% even though diesel prices are virtually the same as three years ago.5
That’s why you need our team of veteran parcel experts and analysts, who will provide you with clarity via a real-world, parcel cost impact analysis. As a part of this service, we can help you reduce and optimize your parcel shipping costs while maximizing your efficiency.
LTL & TRUCKLOAD FREIGHT GRI COST IMPACT ANALYSIS
Most LTL and Truckload carriers announce annual GRIs near the end of the year or at the beginning of a new year.6 The traditional bidding season coincides with this timeframe (Q4 and Q1).7
However, because many shippers are finalizing their annual budgets in Q4, the carrier pricing departments can get overwhelmed. So, if you have the freedom to do so, some experts recommend waiting until Q1 to solicit bids, At that time, the process should be less hectic and you may catch a break from carriers that need more volume and are willing to offer deep discounts to secure your business.
Trucking executives are eager to increase rates for 2025 because their operating costs are continually climbing. Truckload demand has been particularly sluggish for the past two years. Less-than-truckload demand remains relatively soft, however, LTL carriers have maintained disciplined pricing strategies. The LTL rate per pound is now expected to return to the historic high levels observed in 2022, per the previously referenced TD Cowen/AFS Freight Index.8.
Further, according to a recent American Transportation Research Institute (ATRI) survey, 4 of the 5 top issues trucking leaders are preoccupied with are these topics:
- The economy
- Lawsuit abuse reform
- Insurance costs/availability
- Driver compensation9
Clearly, trucking leaders are hoping for a stronger US economy to elevate demand for their services. Further, the ever-increasing costs to operate and maintain their fleets, (as well as “nuclear” litigation verdicts), are motivating them to find a higher ceiling for rates.
They are also eager to see “capacity attrition”, which is a nice way of saying they want to see struggling carriers go out of business.10
With capacity high, demand soft, and some signs pointing to a rebound in 2025, this is a good time for shippers to request bids and negotiate with financially secure trucking companies.
At SSI, our experts can help you do this so you secure very competitive rates in the year ahead.
FREIGHT AUDIT & FREIGHT PAYMENT SERVICES FOR GLOBAL SHIPPERS
Freight audit and payment has been a core competency of SSI for more than 30 years and today SSI is consistently recognized as a best-in-class, multimodal freight audit and global freight payment provider.
In fact, we process freight bills from multiple languages and we pay them in all of the world’s currencies (excluding those sanctioned by the US Department of the Treasury). Our expansive global audit and payment capabilities are great reasons to choose SSI, as they set us apart from many other US-based freight audit & freight payment providers.
Many of our customers have complex global supply chains. So, if you need a multimodal freight cost analysis on a global scale, SSI is a great choice to provide you with this service.
SHIPPING COST MANAGEMENT: FREIGHT BENCHMARKING SERVICES
As carrier-contract shipping costs climb, it is vital you verify your business is paying competitive freight rates. Simply put, an SSI freight benchmarking analysis allows you to compare the contractual rates you are paying against what the market is spending to ship freight along the same routes or trade lanes.
Freight benchmarking can pay for itself many times over, especially when it is performed prior to negotiating annual contracts with carriers. Here is how the process works.
- Upload 1-year of freight-spend data via our secure portal.
- Using our proprietary software tools, we match your trade lanes against comparable trade lanes in our anonymized database.
- We provide you with clear reports that include data visualization dashboards to display your expenditures vs. the market.
- Armed with relevant freight rate data insights, you are equipped to negotiate carrier contracts from a position of strength.
Learn more about SSI freight rate benchmarking services from this previous post on the topic.
SHIPPING COST MANAGEMENT: CARRIER CONTRACT OPTIMIZATION SERVICES
As a part of our comprehensive review of your shipping requirements, our skilled team is able to identify areas that represent opportunities for freight and parcel savings, offer authoritative advice on carrier contract negotiations, and mitigate year-over-year rate increases.
Upon request, SSI will empower you to fully optimize your carrier contracts.
- 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.
SHIPPING COST MANAGEMENT: FREIGHT DATA ANALYTICS SERVICES
As we covered in a recent post, our advanced technologies and data scientists can equip you to transform your shipping facts and figures into relevant business reports and clear, data visualization dashboards. The result? You can easily access and see measurements and metrics relevant to your business needs and key performance indicators.
With SSI freight data analytics services you will be armed with real-world information that is pertinent to your transportation and supplier networks, so you can confidently navigate today’s complex supply chain challenges with speed, agility and wisdom.
ABOUT SSI
At SSI we transform the complexity of global freight audit into cash savings and supply chain intelligence, providing actionable insights to maximize your profit potential.
- Customizable solution scales with your growing and dynamic business needs.
- Automated freight audit drives savings to your bottom line.
- Fintech platform pays freight invoices in 100+ currencies, at favorable exchange rates.
- Actionable business intelligence supports your supply chain optimization efforts.
- Cutting-edge data visualization facilitates your analysis of data and trends.
As described in this post, we also offer a variety of shipping cost management services. Want to learn more? Our team is eager to help you save money. Contact SSI.
Footnotes:
1. Max Garland, “FedEx unveils 5.9% rate increase, surcharge hikes for 2025“. September 16, 2024, as published by Supply Chain Dive.
2. Adi Karamcheti, “FedEx 2025 General Rate Increase: What Shippers Need to Know“. September 17, 2024, as published by Parcel.
3. UPS. “UPS’s holiday hiring spree: 125,000+ seasonal workers needed“. September 24, 2024, as published by UPS.
4. Max Garland. “UPS prepares 5.9% rate increase starting at peak season’s end“. October 9, 2024, as published by Supply Chain Dive.
5, 8. TD Cowen & AFS, “TD Cowen/AFS Freight Index”. October, 2024, as published by AFS Logistics.
6. Todd Maiden, “LTL: How do general rate increases work?“. January 2, 2022, as published by FreightWaves.
7. Zach Strickland. “Truckload spot and contract rate spread remains unnaturally wide heading into bid season“. October 7, 2023, as published by FreightWaves.
9. Colin Campbell. “Economy is once again trucking’s top worry in 2024“. October 14, 2024, as published by Trucking Dive.
10. David Taube. “An encouraging sign for contract rates heading into peak season“. October 11, 2024, as published by Trucking Dive.
SSI blog post entitled: SSI shipping cost management services deliver big savings.