GRI rate increase for 2024
Demand forecasting involves predicting future sales data using historical data, market research, and other influential factors. It allows businesses to create more precise sales predictions. There are many types and methods of creating a demand forecast for your business. Determining which will work best for your e-commerce business is challenging, but it is well worth the investment. Creating a demand forecast is not 100% accurate but will inform better business decisions, strategy, and cash flow. Let’s get into the basics of demand forecasting; the types, benefits, and steps to create one.
Quantifying the True Impact of 2024 Shipping Rate Increases
FedEx and UPS announced general rate increases of 5.9%, causing many businesses to budget for shipping cost increases at or below that threshold. But make no mistake: virtually no company will actually see such a small hike.
Without advanced predictive data science, it’s nearly impossible to accurately quantify the full impact of GRIs and other pricing changes implemented by carriers. Models must account for all of the following factors on a per-package basis:
- Base rate changes
- Dimensional weight pricing adjustments
- Surcharge increases
- Fuel surcharge modifications
- Residential delivery fees
- Additional handling charges
- Other factors
By leveraging sophisticated simulation and modeling, logistics experts can uncover the true rate hike percentage that shippers will endure. This analysis takes into account your specific shipping patterns, volumes, package characteristics, and more.
On average, small and medium businesses will experience the following increases in 2024:
- UPS: 7.72%
- FedEx: 8.17%
That’s nearly a full 3 percentage points higher than the announced GRIs. Companies moving high volumes of large, heavy packages and requiring additional services like residential delivery will see even greater rate impacts.
Now that we’ve established the true cost increase, let’s explore some logistics strategies to help offset this hit to your shipping budget and profit margins…
5 Shipping Logistics Strategies to Combat 2024 Rate Increases
Secure a multi-year UPS or FedEx contract with negotiated rates
Carriers are hungry for new business as volumes dip. Therefore, leverage this to negotiate a competitive contract through 2024 with built-in caps on annual rate increases.
Diversify across multiple carriers
Additionally, add regional parcel carriers like OnTrac or DHL to your shipping portfolio. This spreads risk and makes you less beholden to the whims of a single provider.
Optimize packaging to avoid dimensional weight charges
Furthermore, evaluate all package sizes and shapes to right-size boxes. Ultimately, this reduces costly dim weight fees that spike along with base rate hikes.
Invest in shipping software for greater visibility and control
Moreover, invest in shipping software for greater visibility and control since cloud-based shipping solutions enable dynamic carrier selection, customized business rules, and comprehensive analytics to unlock savings.
Work with a third-party logistics (3PL) partner
Finally, work with a third-party logistics (3PL) partner to let the experts handle everything from negotiating contracts to optimizing your supply chain. In summary, leverage their scale and expertise for lower shipping costs.
The Bottom Line on Shipping Rate Increases 2024
Be prepared for the real impact of 2024 FedEx and UPS rate increases by accurately modeling your cost exposure. Then fight back against diminishing margins with the help of advanced logistics technologies, strategic partnerships, and sheer shipping volume muscle.
Beginner’s Guide to Third-Party Logistics (3PL)
The world of e-commerce is always changing, therefore understanding the roll of Third-Party Logistics is integral to keeping up. In light of this our beginner’s guide to third-party logistics (3PL) will delve into the essential aspects, offering insights into fulfillment services, warehousing, and much more.
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With the right data, relationships and infrastructure, you can avoid merely absorbing ever-increasing rates as the “cost of doing business”. Therefore, take control and let your supply chain drive cost containment and competitive advantage. Specifically, by leveraging data and analytics, you can gain visibility into rates and identify opportunities to optimize costs. Additionally, by collaborating closely with carriers and other supply chain partners, you can align incentives and develop win-win solutions. Ultimately, with the proper foundation in place, you can transform your supply chain into a source of strategic value rather than simply a cost center.
