Additionally, some shippers may see part of their contract voided due to inflation.
FedEx has announced an annual general rate increase (GRI) of 6.9% effective January 2, 2023, its largest GRI ever. However, due to additional rate hikes on accessorial surcharges, the effective increase that shippers will incur may be higher than it seems.
New Fee in 2023
This year, FedEx has introduced a new surcharge called “Delivery Area Surcharge – Remote” and has designated over 3,800 U.S. zip codes to be affected. Packages delivered to these zip codes will incur a USD 3.25 fee. ConData has the tools to calculate exactly what this will mean to you in 2023.
Voided Rated Caps: A Big Impact Lurking in the Fine Print
With year-over-year inflation rates remaining high, shippers have noticed a paragraph quietly added into the fine print of their contracts that may have a big impact on their FedEx shipping rate. A shipper with a custom carrier contract will typically negotiate what is called a Rate Cap. A Rate Cap is a set amount that acts as a ceiling on the shipper’s annual rate increases and supersedes the announced GRI. For example, a Rate Cap of 4.0% means the announced 6.9% rate would effectively be reduced to 4.0% for that shipper.
However, the new paragraph says that if the average monthly inflation rate, based on data from the Bureau of Labor Statistics, is above 3%, then the shipper’s negotiated Rate Cap becomes void, and they will instead be subject to the announced GRI. This is yet another way that carriers try to circumvent negotiated discounts through hidden contract terms.
Get Smarter with Your Contracts
ConData works with shippers every day to optimize their contracts. While the GRI may represent an unprecedented hurdle in the effort to rein in costs, ConData continues to see success in helping clients achieve meaningful savings through contract negotiation projects.