ProShip

Used to a 4.9% GRI? Think again when looking at 2022 parcel shipping.

It’s that time of year again – a time where the national carriers start to divulge their next year’s shipping rate increases. While the GRI has typically hovered around 4.9% for the past couple of years, 2022’s numbers might surprise you.

FedEx Rate Changes and Surcharge Increases

In a late-September press release, FedEx announced that FedEx Express (Domestic, US Export and US Import), FedEx Ground and FedEx Home Delivery shipping rates will increase by an average of 5.9%. These rates are effective January 3, 2022.

FedEx also noted the following surcharge changes that take affect in the coming months: 

• “Effective November 1, 2021, a fuel surcharge increase will be applied to FedEx Express (U.S. domestic package and freight services), FedEx Ground, and FedEx Freight shipments.”
  • Fuel surcharge is increasing by 1.75 points on all services. 

• “Effective January 17, 2022, FedEx Freight will introduce a No Shipment Tendered surcharge that applies when a pickup is performed and no shipment is tendered to the carrier.”
  • To avoid this fee, we suggest using software that automates the pickup call once the pallet has been completed. 

• “Effective January 17, 2022, the International Out-of-Delivery-Area Surcharge and International Out-of-Pickup-Area Surcharge rates will be determined based on the corresponding tier of the ZIP code, postal code, or city of the shipment’s origin and/or destination location for International Express Freight and Parcel services.”
  • Just as the carriers are using rates and surcharges to encourage shippers to use them for smaller, easy to handle shipments, they are also pushing shippers to ship to destinations with high density. 

• “Effective January 17, 2022, a Delivery and Returns Surcharge will be assessed on packages that are delivered or returned using FedEx Ground Economy services.”
  • This $1.00 surcharge is due to FedEx delivering these packages without the help of USPS, resulting in higher costs, thus “passing the buck” onto their customers. 

• “Effective January 24, 2022, Additional Handling Surcharge and Oversize Surcharge rates for U.S. Express Package Services and U.S. Ground Services will be determined based on the shipment’s zone.”
  • It is clear that the carriers prefer smaller, easier to convey/handle shipments and are continuing to adjust rates and surcharges to shape the volume they want in their network 

With the imbalance of transportation supply and the growing demand driven by consumer behavior throughout the pandemic, it is not surprising that all the carriers are using surcharges and pricing to compensate for increased costs or to increase their operating margins.

Overall, the pricing power is not in your favor, but there are things you can do.

1. Leverage multiple carriers, as they all have different surcharges and sweet spots for package sizes and weights to various destinations. You can still optimize your transportation spend to leverage the best carrier and service that meets your delivery standards.
2. Look again at alternatives you may not consider under normal circumstances. Regional carriers, the post office, and even local market couriers and Gig economy deliveries are options to consider.

The point is, as the variety and number of surcharges and fees change dynamically, you must, must, must understand the charges, be ready with options, and use a strategy that allows you to always push your shipments out in the most cost-effective way. At ProShip, intelligent routing of parcels is the industry we invented, we can help.

ProShip and Fedex

ProShip has been certified with FedEx since 2005 and has held a Diamond Tier partner status since the level’s inception in 2014. We’ve also been “Partner of the Year” two-fold, the only solution to do so. 

[ProShip Receives 8th Consecutive FedEx Diamond Status]

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