Parcel shipping costs for US firms jump to open 2023
US companies predicted to see 9-10% increase in shipping costs as parcel delivery firms increase rates
The average UPS customer will pay 10.2% more in 2023 than they did in 2022 and average FedEx customer will pay 9.1% estimates shipping intelligence platform Reveel.
Reveel derived this figure by adding up the annual general rate increase (GRI) for the two companies alongside changes to surcharges, rules and fees. This takes the total up beyond the 6.9% GRI increase to the figures above in their analysis.
However, the company also noted that the increase would frequently be more for a variety of companies. They estimate less than 4% of businesses will see their shipping costs increase by the 6.9% GRI rise and the heaviest burden would fall on companies shipping large and heavy parcels, such as auto parts, furniture, home goods, and sporting goods.
These figures come on top of rises generated from pandemic demand, but sit in a very different context today. Currently UPS and FedEx are both sounding more cautious notes around 2023 prospects as the surge in demand seen during the pandemic ebbs into a much weaker demand picture. FedEx has cut 12,000 workers since June 2022 and plans for more reductions as part of $3.7 billion cost reduction drive. UPS, which started cost reduction exercises earlier, expects revenue declines this year and its Chief Executive, Carol Tomé, described the outlook for economic growth in 2023 as "cloudy, at best."
"Initially most shippers accepted and understood the carriers' cost increases, but late last year we saw FedEx and UPS break revenue records, announce a then record-breaking general rate increase of 5.9% and enter 2022 with a more overt focus on growing revenue-per-package than ever before," said Josh Dunham, co-founder and CEO of Reveel. "It is remarkable, and I would argue shameless, to see both carriers following up with another record-breaking general rate increase, even as they see shipping volumes in their networks fall.”