Last year was tough for the shipping industry, causing many businesses to be more considerate than ever when planning for their 2021 transportation budget. One consideration to include in your planning is the general rate increase (GRI) of significant carriers like USPS, FedEx, and UPS.
On December 27, 2020, UPS Ground, Air, and International services, along with other major carriers like FedEx, have increased an announced average of 4.9%, which matches both the UPS 2019-2020 increase and the planned FedEx 2021 GRI. While this is an expected and ordinary price hike, shippers and their budgets will be affected differently. Carol Tomé, the new CEO of UPS has commented the GRI:
“The final piece of our strategy comes down to being better, not bigger. Now that doesn't mean UPS is not going to grow because we are. It means that we will lean into growth from the right opportunities like SMBs, international, global freight forwarding, and other high-yielding sectors, and we will grow from our revenue quality initiatives. We are on a journey to optimize the volume that flows through our network. When you have the tight capacity, it also means that prices tighten. And as prices tighten there is a shift in certain customers who are more price-sensitive than others. We're okay with that if we're losing non-nutritive sales. We're okay with that. It's not about volume share growth. It's about value share growth. So that's how we'd like you to think about us at least in the short-term value share growth”.
While a 4.9% increase is a general number, the actual rate hike will differ depending on your shipping profile, shipment characteristics, and the service you use. It is important to take a deeper look at this increase to understand the actual impact on your costs and plan your shipping budget for 2021 accordingly. It is also critical to take into account the updates to FedEx and UPS surcharges. Common surcharges like Residential Delivery and Address Correction will cost more in 2021. Additionally, both giant carriers have extended the requirements for their Additional Handling fee and have updated the list of zip codes for Delivery Area surcharges.
While GRI is an annual rate hike that all shippers have to adjust to, it is still vital to get competitive freight shipping rates and be able to compare rates from different carriers. Compare quotes in real-time for free with our shipping calculator!