How Procurement Can Manage Shipping Rate Increases

Does your company feel that it’s lost control of its shipping operations? After an exceptionally tough year of supply chain disruptions and strained carrier capacity, your company and logistics operations could use a break. The pressure on supply chains is showing no sign of easing up anytime soon while manufacturers are having issues covering the cost of shipping. 

UPS and FedEx announced their highest rate increases in recent years coming in at a hefty 5.9%. These general rate increases (GRIs) are the latest in a two-year run of skyrocketing fees, surcharges and cost increases. Procurement and supply chain leaders have an opportunity right now to help their organization take back control of shipping operations and create a fresh start.  

Freight and logistics is one of the most unmanaged and demanding areas of spend. Partnering with a group purchasing organization (GPO) can provide you with already locked-in shipping rates that are less volatile and at the same time help you manage your complex spend cube with transportation programs that maximize quality, savings, and accuracy. As you align with stakeholders, we’re working to help you understand the current market obstacles and plan for the future.   

We’re previewing our in-depth report comparing the UPS and FedEx 2022 GRIs to give your procurement and supply chain teams a clear picture of the rates and action steps to take in response. 

Comparing the UPS & FedEx 2022 GRIs 

Companies looking to make sense of all the recent rate changes and how they affect their small package operation can benefit from the fact that thanks to the 2022 GRI announcements, differences between the carrier's rates, services and accessorial charges are now smaller than ever. Having your procurement team armed with the knowledge to improve how you choose carriers, ways to optimize the location of suppliers, ideas for avoiding fees and surcharges will provide you with the comfort of knowing you’re paying for the proper service level and overall cost.  

We’re analyzing the 2022 GRIs from UPS and FedEx that should be a top priority for every company that ships small parcels. Neither carrier makes it easy for customers to calculate the impact the GRIs have already had on their rates and costs. Adding to the urgency, both carriers have implemented the largest GRIs in years on top of the many additional pandemic-driven extra fees and surcharges that are still in place.  

Navigating the Shipping Industry

Group purchasing can be a strategic advantage when dealing with shipping and inflationary issues as the GPO has costs already locked in and less volatility. With inflation at a 40-year high, we’re seeing a strong correlation between GRIs and inflation rates. Given the current market conditions, the logistics rate inflation in supply chain is one of the largest driving factors of this inflation spike you’re experiencing.  

Capacity is a large concern for companies right now. FedEx and UPS have been very bold about what types of customers they want to work with because they’re dealing with limited capacity along with driver and equipment shortages. Fuel prices are also becoming a real problem, not only for the less-than-truckload (LTL) and trucking industry, but for ocean vessels as well.  

In our UPS and FedEx 2022 GRI comparison report, we’ve highlighted the key differences our small parcel experts at TransImpact identify as the most important for your company to look at first. 

• Domestic Services  
• Minimum Charges  
• Postal Products  
• International Exports/Imports  
• Surcharges, Fees and Accessorials  

Creating a Fresh Start

This analysis is an important first step toward minimizing the cost impact of the GRIs at your organization. But part of the process is getting your mind around not just the GRI but all the fees and surcharges the carriers have in place. Comparing the two carriers can be done in an apples-to-apples way, making it simpler to make analytical and data-driven strategic decisions within your parcel operations.  

Consider the long-term opportunities that can help your company optimize your parcel operations. You can even start with the parcel data you already have. Sign up for a demo of our “Parcel Spend Intelligence” solution to learn more about the cost and service improvements that are just beneath the surface.  We recommend letting our small parcel experts run a no-obligation analysis to model all of your company’s additional costs for 2022 as a result of the GRIs and the other added fees. We also provide specific advice on how to mitigate as many of these increases as possible.