Effective January 1, 2024, FedEx will increase its rates by an average of 5.9% for U.S. domestic, export, and import services.
While this figure may seem promising compared to last year, the pricing changes FedEx is making are more complex than meets the eye. The frustrating truth is that your actual shipping costs will likely go up more than 5.9% in the new year.
It is crucial for shippers to carefully assess these adjustments, understand how their shipping costs will be affected, and take proactive measures to mitigate the impact of this hefty rate hike.
NOTE: While the new FedEx rates take effect on January 1, 2024, UPS’s take effect a week earlier on December 26, 2023. For more information on UPS rate changes, head to our Navigating the 2024 UPS Rate Increase blog.
Key Takeaways
- The 5.9% rate hike is only an average. The actual increases you will encounter depend on several factors, including services used, distance traveled, and package weight.
- The 2024 FedEx GRI does not limit surcharges to the 5.9% increase.
- FedEx rate increases target expedited, long-distance deliveries.
- Packages 10 lbs and under will experience a notably smaller rate increase compared to shipments 11 lbs and over.
2024 FedEx Standard List Rates
| Minimum Net Charge | 2023 Rate | 2024 Rate | % Increase |
|---|---|---|---|
| Residential Ground | $5.50 | $5.55 | 0.9% |
| Residential Home Delivery | $5.15 | $5.55 | 7.8% |
| Priority Overnight | $37.04 | $39.96 | 7.9% |
| Standard Overnight | $33.87 | $36.41 | 7.5% |
| 2 Day | $22.59 | $23.83 | 5.5% |
| Express Saver | $21.03 | $21.97 | 4.5% |
| Ground/Home Delivery | $10.10 | $10.70 | 5.9% |
2024 FedEx Surcharges
Again, most common surcharges will increase substantially higher than 5.9% in 2024. Considering that surcharges make up between 20% to 40% of a parcel shipper’s annual spend, it is crucial for you to fully understand the implications of these impending increases as they could have a detrimental impact on your parcel budget.
| Common Surcharges | 2023 Rate | 2024 Rate | % Increase |
|---|---|---|---|
| Address Correction | $21.00 | $22.50 | 7.1% |
| Delivery Area Surcharge (min) | $3.70 | $3.95 | 6.8% |
| Delivery Area Surcharge (max) | $7.15 | $7.70 | 7.7% |
| Residential Surcharge (ground) | $5.15 | $5.55 | 7.8% |
| Residential Surcharge (air/express) | $5.80 | $6.15 | 6.0% |
Strategies to Minimize the Rate Hike Sting
- Diversify Your Carrier Mix. Instead of relying solely on one carrier or a limited carrier mix, consider diversifying your carrier portfolio. Adding variety to your carrier mix offers access to competitive rates and a broader array of shipping services. And when done correctly, this can save your business money, improve delivery times, and in turn, increase customer satisfaction. By not “putting all your eggs in one basket” and spreading your shipping volume across different carriers, you open yourself up to cost savings that would otherwise not be available.
- Negotiate. In a time when shipping rates are increasing and shipping volumes are declining, you are in a strong negotiating position. Take advantage of this opportunity to negotiate with carriers and secure more favorable rates (i.e., make them work to retain your business!). Demonstrating your value as a customer and exploring alternative options can be a huge help in offsetting the impact of this rate hike.
- Leverage Address Validation. With the address correction surcharge increasing significantly more than the announced GRI, shippers should also consider incorporating a reliable address validation technology into their shipping operations. By automatically validating whether the shipping address entered at checkout is residential or commercial and passing that information along to the carrier, you will not only dodge surprise last-mile delivery fees (which I remind you, can add up very quickly, especially with the 7.14% increase coming in 2024!) but also boost customer satisfaction with more on-time deliveries.
How Does This Work in ShipperHQ?
Our Address Validation feature works with UPS or FedEx to validate customers’ addresses in the US and Canada specifically. So, as long as you have one of those carriers set up with us, this can be used for any carrier on your ShipperHQ account.
While there are some differences in support across eCommerce platforms, address validation within ShipperHQ supports each of the following functions:
- Dynamic Address Type Lookup: Is this going to a Business or Residence?
- Dynamic Address Validity: Is this a valid or invalid address within UPS or FedEx?
- Address Suggestion at Checkout: Do you mean ‘this’ address?
- Manual Residential/Commercial Selector: Validate your address as a business or a residence directly.
While wrapping your head around these rate changes can be quite challenging, understanding the ins and outs and implementing strategic measures is essential to your business’ success in the new year.
We are here to support you.
Sign up for a free ShipperHQ trial today to get your shipping strategy optimized and expertly prepared to take on the 2024 rate hikes.
