Ben Franklin’s 1789 letter invented a phrase that has been repeated ever since: “OUR NEW CONSTITUTION IS NOW ESTABLISHED, EVERYTHING SEEMS TO PROMISE IT WILL BE DURABLE; BUT IN THIS WORLD, NOTHING IS CERTAIN EXCEPT DEATH AND TAXES.”
In other words, “AS SURE AS DEATH AND TAXES” represents that something is “bound to occur, it is inevitable.” Well, I would like to add two more things to Ben Franklin’s “inevitable” list. First, a yearly FedEx and UPS rate increase and second, you will learn new things every year. Both are as certain as death and taxes. Both are inevitable.
The two delivery giants recently announced a 5.9% average rate increase on their various shipping services that will take effect on December 26 for UPS and Jan 1 for FedEx. Even though the Parcel Delivery market is swinging in shippers’ FAVOR. Go figure!
The 5.9% rate hike at FedEx and UPS is only an average. The actual increases shippers will encounter vary depending on each shipper’s shipping characteristics. Some highlights of this rate hike are:
1. Both FedEx and UPS increases range from 5.5%-7.5% by service level — Lower than previous year: 6.5% to 10% in 2023
2. Two Day AM is the service level with the largest increase (7.40% FedEx; 7.09% UPS)
3. Zone 5 is the zone with the largest increase from both (6.83% FedEx; 6.84% UPS)
4. FedEx rates are much higher than UPS for 3-day service: 15%
5. UPS rates are marginally higher for 1-day service categories (1DA, 1DS, 1DP): 0.63%
6. UPS rates are generally less expensive in zones 2-5
7. FedEx rates are generally less expensive in zones 6-8
Shippers should also consider any surcharges that apply to their shipments, which aren’t factored into the carriers’ base rates but will also see increases for 2024. Added fees that FedEx and UPS levy include charges for large and oversized goods, packages that require additional handling, deliveries to remote locations, and fuel surcharges.
Despite the rate hikes from FedEx and UPS, what we can learn today is shippers are in a prime position to negotiate better contract terms as delivery demand remains soft. Or simply employ CPC CONSULTANTS and avoid this entire situation by allowing CPC CONSULTANTS to perform their Supply Chain magic.
The key for shippers in negotiations is to make sure they understand their biggest strengths as a customer that can lead to reduced charges and there is no better way than to allow CPC CONSULTANTS through their FREE ASSESSMENT to take a look at your transportation costs via their “CPC EVALUATOR” software and at NO COST show your specific areas of strength based on our library of rates and utilizing our freight optimizer (CPC Evaluator).
Companies wishing to employ CPC CONSUTANTS and jump on this FREE opportunity can reach me out to us for further information and directions. Let CPC Consultants work on your behalf to rid your yearly FedEx and UPS “inevitable” cost increase challenge.