14 Jan UPS and FedEx GRI Comparison for 2019
While it’s true that this year’s General Rate Increases (GRIs) issued by FedEx and UPS came as no surprise to the shipping industry, they still managed to shake up the market. Still, as unsettling as these developments are for most shippers, annual increases offer shippers the opportunity to evaluate their shipping profile and make necessary changes. An in-depth analysis of your shipping patterns can help to alleviate the uncertainty and take back control of your shipping.
Here are the key takeaways from the 2019 GRIs and what they mean to shippers:
While FedEx and UPS prices are comparable for many domestic services, one of the notable differences is between FedEx’s Smartpost and UPS’s Surepost. As an example, FedEx’s price advantage over UPS for a package weighing between 1 and 9 lbs. was only 2% in 2018; for 2019 it ranges from 5%–8%.
The difference in 3-Day shipping is also substantial, although it’s remained this way for the past several years. Shipping postal services via FedEx is cheaper, however, which is a new development this year.
The changes to international shipping are more complex than for domestic shipping and vary by destination and lane. For 1- to 3-Day guaranteed services, FedEx is the best option, with lower rates for most lanes, but not all of them. For example, UPS is the best choice for imports from Japan and South Korea, but FedEx is the one for shipments from Taiwan. On the other hand, UPS is the winner for exports to most Asian countries for 2- to 5-Day services. International shippers will need to mix and match carriers to ensure they get the best international shipping rates.
Increases in Accessorial fees are among the most noteworthy of this year’s GRI announcements. FedEx has lower fees and Surcharges across many of the categories, specifically for residential deliveries. While UPS enjoyed some price advantages in 2018 (e.g., Oversize/Additional Handling Surcharges), that’s not the case in 2019, since FedEx is now the lowest-cost option for many of the Accessorial categories.
Ecommerce shippers should note that many of the Surcharges related to dimensions, weights, and package types are now lower with FedEx. As was the case in 2018, FedEx is the more economical option for Delivery Area Surcharge accessorials, but now by an even wider margin over UPS.
FedEx is not the best choice for every shipper, though, as UPS is still the better option for several types of shipments. Still, any company making a lot of residential deliveries that’s usually charged for Accessorials will need to review how these rate changes will impact their business.
Both carriers announced mid-year increases last year, so the best shipping options may also change during the course of 2019. Accordingly, shippers must continually monitor both carriers’ increases and how the changes affect their rates.
While shippers may feel that they lack control over GRIs, they can adjust their shipping to best mitigate the higher rates. Small parcel rates have changed for 2019, and it’s the shipper’s reponsiblity to understand the differences. Shippers can review their agreements to determine which modes, lanes, and carriers are appropriate for each shipment.
While shippers cannot change the higher prices, they can use various methods to alter the cost of shipping. And remember that GRIs can be worked into your carrier agreement if they’re not already in there. Keep in mind that contracts can also usually be modified or renegotiated at any point during the year.
Dealing with the Increases
This year’s GRIs will certainly impact many shippers. Analyzing how these changes will impact your specific situation is the first step. VIProcure can assist you in understanding this year’s GRI shifts while ensuring your company reacts to them in the best way for the greatest success.