Analysis: Parcel Shipping Costs for Most American Businesses Will Increase Far in Excess of Record-Breaking General Rate Increases from FedEx and UPS

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Jan 25, 2023, 09:00 ET

The highest general rate increase ever belies the full extent of cost increases; most companies will see shipping costs increase by 10.2% with UPS and 9.1% with FedEx

IRVINE, Calif., Jan. 25, 2023 /PRNewswire/ -- Reveel, whose Shipping Intelligence™ Platform enables companies to level the playing field with carriers, today announced the findings of its analysis of shipping cost increases for the coming year. Designed to provide businesses with an accurate indicator for budgeting, Reveel's analysis combines the annual general rate increase (GRI) introduced by FedEx and United Parcel Service (UPS) with the myriad surcharges, rules and fees customers must also consider, but which are not included on either company's rate card.

Although FedEx and UPS unveiled the highest annual general rate increase in either company's history, 6.9%, Reveel's analysis found that the impact on most businesses will be significantly greater. Key findings include:

The average UPS customer will pay 10.2% more in 2023 than they did in 2022;
The average FedEx customer will pay 9.1% more in 2023 than last year; and
Less than 4% of businesses will see their shipping costs increase by 6.9% or less.

Some businesses will pay significantly more, particularly organizations that ship packages subject to additional shipping and handling charges, such as those that weigh 50 pounds or more, or which are 48 inches or more on their longest side. As with last year, companies in industries like auto parts, furniture, home goods, and sporting goods that ship oversized or heavier parcels will be particularly hard hit by new rules and fees in 2023.

E-commerce businesses that compete on low margins or that differentiate themselves with free shipping are also likely to be impacted. Notably, the 2023 rates from the nation's two largest carriers build on dramatically higher shipping costs that first emerged during the pandemic when the dramatic increase in online sales stressed both carriers' networks.

"Initially most shippers accepted and understood the carriers' cost increases, but late last year we saw FedEx and UPS break revenue records, announce a then record-breaking general rate increase of 5.9% and enter 2022 with a more overt focus on growing revenue-per-package than ever before," said Josh Dunham, co-founder and CEO of Reveel. "Our predictions for shipping cost increases this year proved accurate, but ultimately were conservative because of additional increases the carriers later rolled out due to geopolitical events and new protocols."

For example, earlier this year FedEx changed the tables it uses to calculate fuel surcharges in order to generate more revenue on top of the fuel surcharges it put in place after the war in Ukraine sent global energy prices skyrocketing. The carrier also began charging peak season surcharges more than a month earlier than ever before even though shipping volumes historically are lower in September and were so this year as well.

"It is remarkable, and I would argue shameless, to see both carriers following up with another record-breaking general rate increase, even as they see shipping volumes in their networks fall," added Dunham. "Hundreds of companies use our platform and most feel that they are being taken advantage of in light of what appears to be a never-ending money grab by FedEx and UPS."

Used by hundreds of companies across industries, Reveel's Shipping Intelligence Platform uses advanced data science, machine learning and artificial intelligence to provide shippers with actionable insights they can use to make better decisions, fine-tune their shipping processes, and identify opportunities to save money in real-time. With an intuitive dashboard, users gain unprecedented understanding of their shipping vital factors, including service spend, surcharge spend, average cost per shipment, shipping weight (including average weight and the percentage of parcels hitting the carrier's dimensional weight or DIM), the percentage of packages that meet the carrier's minimum expenses, and average shipping zone.

The platform also enables users to easily audit their shipping spend, compare shipping contracts, and receive alerts – for example when negotiated special terms don't survive for the term of the agreement. It also delivers the Reveel Peer Index, a benchmark that calculates each shipping organization's performance and health against peers with a similar shipping profile.

To conduct its analysis of each carrier's shipping costs in the year to come, Reveel's data scientists create a model that combines the new GRI with the new surcharges, rules and fees not included on the rate card, and then applies them to real shipments made by customers the previous year. The resulting apples-to-apples comparison is based on many millions of real shipments and shows how real-world shipping costs are impacted from one year to the next.

Notably, Reveel also offers a free GRI Impact Analysis. With it, shippers can see exactly how the new GRI and the complex web of rules, fees and surcharges will impact their shipping costs if they make the same shipments they did last year.

"When calculating 2023 budgets, it's imperative that shippers remember that the GRI is only one of many factors that influence shipping costs," adds Dunham. "Shippers absolutely need to go to their carrier this year with real shipping intelligence that enables them to negotiate more effectively and reveals areas where they can save money right now. Now is a great time to explore their options, including looking at different service levels or switching carriers."

About Reveel

Reveel is the leading Shipping Intelligence™ Platform that enables companies to level the playing field with FedEx and UPS. With over 15 years of parcel agreement management expertise and $200M+ in savings for our clients, we provide actionable insights to make smarter business decisions and give you peace of mind. Leverage the power of data science and peer comparison data to capture significant ROI and improve your competitive advantage. For more information, visit our website here, or follow us on Twitter, LinkedIn or Facebook.

Media Contact:
Ken Phillips
Guyer Group for Reveel
E: [email protected]

SOURCE Reveel