Shipping costs are rising. What else is new, right?
For 2021, some are increasing more than others, and if you rely solely on the average increase announced by the carriers for your planning, you could find yourself blowing next year’s budget.
What is the General Rate Increase?
The General Rate Increase, or GRI, is the annual announcement by carriers like FedEx and UPS about the average increase in their rates for the coming year. Individual rates for services and surcharges can rise far more than the GRI, however, affecting some shippers more than others.
What is the GRI for 2021?
For many years, the average rate announced was 4.9%. For 2021, FedEx announced a 4.9-5.9% increase in their rates.
What should I do to prepare for the GRI?
The best way to get ready for shipping cost increases in 2021 is to get to know your own data.
Every shipper has a shipping profile, a complex set of data made up of your service types, package weights and dimensions, pick-up and delivery locations, and surcharges. Your carrier uses it to set the rates and terms in your contract.
Since your carrier has all this information, you should too. Get to know your data by understanding the story your shipping profile is telling you. Study things like:
- What are your most common service types?
- Which surcharges are costing you the most?
- Can any costs be controlled operationally?
- Is your distribution network set up well?
- Is DIM weight a continual issue?
Knowing your shipping profile will empower you in your next carrier contract negotiation because you’ll better understand how your carrier’s proposed rates, discounts and minimum charges will affect your shipping spend.
If this all seems daunting, seek out some help. Every shipper is different, so it’s unwise to rely on industry surveys, your carrier or your gut to tell you what a “good” rate is or what you “should” be paying.
Experts with a strong data set and experience dealing with carriers can help you get a better feel for your situation by comparing your shipping costs to those of companies with similar shipping profiles.
Your own data is the key
In 2020, carriers raised rates on various service types and surcharges outside of the normal GRI time frame, catching many shippers by expensive surprise. Preparation is key when it comes to the GRI, but it pays to stay informed about your shipping profile any time of year. Knowing your data and how it affects what you pay can help you communicate with your carrier rep from a position of information and strength on a regular basis, no matter what 2021 might bring.
Get your 2021 GRI Prep Guide! It’s got four important action items you can take to make sure you’re ready for anything.