Resource Center/Article • 10/02/2024
What Shippers Need to Know about FedEx’s 2025 General Rate Increase (GRI)
FedEx has announced their intended increases for the year. Here’s what you need to know.
Cassidy is a top contributor for Green Mountain’s Advisory Services, specializing in transportation market trends and insights along with carrier pricing proposals and optimization opportunities. In her role on the Advisory Services team, Cassidy models and analyzes shipper data for developing and validating contract negotiation strategies and delivering best-in-class RFP management solutions. During her 5 […]
What is GRI?
GRI means General Rate Increase. Carriers publish new service guides each year, which contain the new rate base for any and every discount you may have in your carrier agreement. When these new rates are released, it is vital that shippers secure their new discounts aligned with their contractual rate caps. A rate cap is a contractual element that protects shippers from taking the full list increase each year during GRI season, which typically takes place each year in January. Services or surcharges with rate caps should not have an increase that exceeds whatever percentage is listed in the agreement. It is imperative that shippers confirm the increase aligns with their contract to avoid incurring changes beyond what is stipulated in the agreement. How much do the carriers typically increase their rates each year?
Historically, the carriers are very closely aligned on most of the increases released each year. For Ground domestic services, the carriers have announced the same increase since 2014. Express varied slightly between the carriers in 2016 and 2017, but they have since been aligned. FedEx has announced a 5.9% GRI this year.
For Ground services, the standard increase for many years was 4.9% (2014 – 2021), but both carriers raised further to 5.9% in 2022 and 6.9% in 2023. Last year, a 5.9% increase was announced for both Ground & Express services by the carriers.
Historically, the carriers are very closely aligned on most of the increases released each year. For Ground domestic services, the carriers have announced the same increase since 2014. Express varied slightly between the carriers in 2016 and 2017, but they have since been aligned. FedEx has announced a 5.9% GRI this year.
For Ground services, the standard increase for many years was 4.9% (2014 – 2021), but both carriers raised further to 5.9% in 2022 and 6.9% in 2023. Last year, a 5.9% increase was announced for both Ground & Express services by the carriers.
Base freight is highly impactful to shipper cost, but it is important to note that the carriers will be increasing some if not all of their surcharges. Let’s look at a couple of historical surcharge increases from the carriers.
Ground Residential Surcharge
Another highly impactful fee for a lot of shippers is the Residential surcharge. Residential surcharges are applied to any shipment destined to a resident, which means these are typically unavoidable for many shippers. The carriers have historically increased the Ground Residential fee anywhere from 4.40% at the low end to 9.20% on the high end. This year, FedEx has announced a $5.95 fee (a 7.20% increase from last year).
Address Corrections
Address Corrections were announced at $12.00 by FedEx and $12.35 by UPS in 2014. Last year, these fees were released at $22.50 and $21.00 respectively. That is an 87.5% increase over the time frame for FedEx. This year, FedEx has announced a new list rate of $24.00 (6.7% increase from last year).
What’s Next?
Now that we have some guidance on rate increases for 2025, it is time for due diligence on the shipper side. Securing your annual base and/or surcharge discount increases is imperative to confirm that FedEx is only raising your rates by the contractually agreed upon amount. It is also important to note that the list rates will not be increased by 5.9% across all weights and zones. FedEx will target some weight, and zone breaks with higher increases than others. This is a major reason we see increases above rate caps.
If your shipping profile is more impacted by certain, targeted increases, you will need to understand the impact and follow up with your FedEx partners to adjust. Each service or surcharge that you have a rate cap for should be validated. Net increase within your contractual rate cap is good, but that rate cap applies to each individual element. Ensure these rate caps are intact for all applicable services and surcharges, and both you and the carrier will be prepared for 2025.
If your shipping profile is more impacted by certain, targeted increases, you will need to understand the impact and follow up with your FedEx partners to adjust. Each service or surcharge that you have a rate cap for should be validated. Net increase within your contractual rate cap is good, but that rate cap applies to each individual element. Ensure these rate caps are intact for all applicable services and surcharges, and both you and the carrier will be prepared for 2025.
As you prepare for 2025, consider ways to turn challenges like navigating 2025 General Rate Increases into opportunities for your business. At Green Mountain, we help the world’s largest shippers with the most complex, intricate networks gain more value from their shipping networks.
What makes us different? We operate as a force multiplier, combining the most tenured, knowledge experts with the most powerful business intelligence and systems so you can do and achieve more. Learn more about why the world’s top shippers trust us to guide them to the top of the shipping summit.
What makes us different? We operate as a force multiplier, combining the most tenured, knowledge experts with the most powerful business intelligence and systems so you can do and achieve more. Learn more about why the world’s top shippers trust us to guide them to the top of the shipping summit.
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