Ask AFS – Could Parcel Carrier Rate Caps Be The Next Shoe To Drop?

FedEx and UPS’s GRI for 2022 was 5.9%. But our company’s contract has a 4.5% rate cap in place until later this year. Does that mean we’re in the clear for now?

If you’re a shipper whose contracts include a rate cap, you’re probably feeling pretty good about now – because unlike other companies, you won’t have to pay the full percentage of the new GRI until after your contracts expire. 

Just don’t get too comfortable with that perk.

In addition to offering higher rate caps recently, it’s possible that FedEx and UPS may decide to introduce new terms and conditions into future contracts that make these caps more conditional – and less subject to a shipper’s control.  

One such condition could be rendering all rate caps null and void when it’s peak season (which lately has been almost every season). Another could be adding a clause that allows these caps to stay in place only if certain market or macro-economic factors are present.

The bottom line is, don’t take any aspect of your current or future parcel carrier contract for granted. Read the fine print. Expect the unexpected. And – as we mentioned in a previous story – stay on the lookout for any offers or clauses that seem too good to be true, especially if they might diminish your ability to manage your parcel spend or service quality.  

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