A General Rate Increase, also known as a GRI, is basically an annual increase to your small package shipping costs. The national carriers like UPS and FedEx have a set of list rates for every package weight and destination and each year these costs increase by a certain percentage.
Interestingly, both FedEx and UPS have had the same annual increase for years. In 2022, both carriers raised rates by 5.9%. In 2023, they raised rates by 6.9%. And now, in 2024, they will rates rates by 5.9% (again). There were a few years prior to that when they raised the rates by 4.9%. Do you see the pattern? Both carriers magically increase the rates by the same amount as pictured in the graphs below.
The annual cost hike of 5.9% for 2024 is an average increase for transportation costs for all services, weights and destinations. Each weight can vary from that 5.9% increase. You can see from the table below that some 2-Day and 3-Day delivery services have a 7.9% increase in zones five to eight. It’s very important to know which zones and services you use.
As mentioned previously, the GRI only applies to transportation costs and not surcharges. However, surcharges also receive their own increase.
A surcharge or accessorial is a charge above the basic transportation charge. If a package is delivered to a residence, then it will qualify for a residential surcharge and it will get an additional handling weight surcharge if the package is above 50 pounds. The increase in these charges are historically, quite a bit higher than the GRI. The table below shows the increase for some of the major surcharges. Surcharges can vary from 5.4% to 21.1% and are usually between 20% to 30% of your total shipping cost. These increases combined will affect your bottom line.
AFS can help reduce the impact of the GRI to your shipping costs. Click here to speak to one of our team members for assistance.