Understanding Carrier Rate Increases

To Better Prepare and Effectively Execute Carrier Negotiations

Because of the increase in shipping volumes attributable to the surge in e-commerce, carriers enacted an unprecedented number of rate increases, surcharges, and fees in 2020. With a record number of consumers now accustomed to online shopping, leading to record shipping volumes, many major carriers levied surcharges in advance of the 2020 holiday shopping season.

Already, shippers can expect more of the same from carriers in 2021:

• FedEx unveiled rate increases and late fees that took effect in 2021. Starting in January, FedEx raised rates an average of 4.9% for its Ground, Express, and Home Delivery services. They are also charging a 6% late fee to U.S. FedEx Express and FedEx Ground customers who don’t pay invoices within their agreed upon payment terms.
• DHL Express announced a 4.9% general average shipment price increase for U.S. account holders effective January 1, 2021.
• UPS announced increased rates for 2021 by an average of 5%, effective December 27, 2020.
• Even the USPS filed for proposed 2021 rate increases to take effect in January 2021.

While understanding the impact of carriers’ general rate increases is critical for organizations with any kind of parcel volume, identifying exactly which factors may drive the most significant shipping cost changes is critical for effectively planning budgets for 2021; shippers need to take a comprehensive look at the intricacies of carriers’ pricing strategies.