Shipping will get more expensive for your company next year as more and more carriers announce higher pricing. So far, most carrier 2023 general rate increases (GRIs) are around 6.9%, with some inching higher as 2022 ends. That means everything will cost you at least a little more, but some products and parcel types may see greater increases that demand you have a smart partner working to control your costs.
Now is the time to learn and plan, plus reach out to 3PLs like Red Stag Fulfillment to learn about potential options to reduce your total cost to ship.
Looking at major carrier GRIs
UPS, FedEx, and LaserShip/OnTrac are raising their GRIs an average of 6.9% on ground services. According to FreightWaves, ground base pricing for UPS and FedEx for a 1 lb. package shipping to Zone 2 is over $10 for the first time.
FedEx Freight rates will increase by an average of 6.9%-7.9% based on your transportation rate scale.
Increases like the carrier 2023 general rate increase are standard. Some will follow the lead of the major providers, while others will push a little higher to either catch up with competitor pricing or secure greater revenues.
These rate increases are higher than in most previous years and generally were announced close to the start of the peak. Carriers are still dealing with higher fuel pricing and inflation, but demand is starting to decline, and there are few capacity issues. This reduced pressure and package volume may give you and partners like Red Stag better negotiation positions as 2023 starts.
Additional costs to watch
Companies will face a wider range of increased costs for their shipments based on customer type and location. Alongside the carrier 2023 general rate increase, you’re looking at higher costs for shipping greater distances, with Zone 5 often serving as a starting point for increases at or above 8%. Some other increases will likely impact most of your 2023 orders.
Residential and delivery area fees
- UPS: 9.8% increase in delivery area surcharge
- UPS: 9% increase for residential delivery
- FedEx: 8.5% increase for delivery area surcharge, with an additional $13.25 charge for “remote” service (remote defined here)
- FedEx: 5.7% increase for residential delivery via Ground and 9.4% for Express
- LaserShip/OnTrac: 8% increase
Additional handling fees
- UPS: 18.8% increase on large package fees
- FedEx Home: 18% increase in oversized package fees
- FedEx Ground/Express: 19.6% increase in oversized package fees
- LaserShip/OnTrac: 8.6% increase for any package that goes over the size or weight limits or has packaging that needs correction
How can you respond to carrier 2023 general rate increases?
The carrier 2023 general rate increases and other cost increases aren’t as dire as they feel. There’s work you and your supply chain partners can do, especially in the last mile.
Look for areas where you can provide value to carrier partners and start your negotiations there. Demand is slowing while carriers are still bringing on more capacity, and 2022 also saw the rise of many alternatives in major metro areas. You will likely have the leverage to combat some of the pain that carrier 2023 general rate increases could cause. Regional carriers are growing and providing more alternatives, which could improve your position.
Partners like 3PLs are already discussing increases with carriers to find more favorable solutions for their high parcel volume. There’s a chance that switching to a 3PL that is a better fit for your organization and products could help you immediately start tackling those uncertain costs. Look for opportunities to protect your business.
“This is a higher increase than we have seen in years,” says Tony Runyan, Vice President of Client Success at Red Stag Fulfillment. “We are working diligently with carrier partners to understand what we can do to offset GRIs through other incentives and efforts. Right now, I’m encouraging our partners and any eCommerce company to consider adjusting the prices of their products or shipping costs they charge (if applicable) so they aren’t trying to shoulder the increased costs themselves, putting their business at risk.”
Not sure how to get started with these changes? It’s time to get expert help.
