Lettuce. Eggs. Margarine. Fuel. Airfare. These are just a few products and services most impacted by the rising inflation rates. Soon, you will be able to add shipping to that list.
In the coming months, FedEx and UPS will announce their 2024 rates. Amidst some of the highest inflation rates in decades, 2023’s rate increase was an astounding 6.9%. With inflation rates settling, can you expect a decrease in rates, or should you prepare for a hefty increase in 2024? We’ll share how current inflation rates affect global pricing, how these rates affect shippers, and how you can protect yourself from unreasonable increases with ShipRx services.
According to the US Bureau of Labor Statistics, the 12-month US consumer price index (CPI) percentage change for April 2023 is 4.9%. The CPI is one measurement that shows whether inflation rates are rising or falling.
In this case, a CPI of 4.9% is good news. The last time we saw this number dip below 5% was in June 2021. Compare that to June 2022, when that figure exceeded 9% and marked the most significant increase since 1981.
However, just like the tremors we’re still feeling from the earthquake that was Covid-related supply chain issues, businesses around the country are not yet feeling relief from this downward trend in inflation.
FedEx is deep into its DRIVE strategy, which aims to cut $4 billion in costs by fiscal year 2025 to increase its profit margin.
And this year, FedEx and UPS have utilized dynamic pricing to raise and lower rates as fuel, inflation, and demand wax and wane. Thanks to this strategy and a decline in demand for e-commerce, we’ve seen shipping rates remain manageable.
As we near the midpoint of 2023, we expect the major carriers to announce their 2024 rates in the next four months. In 2021, FedEx and UPS announced they would raise their rates by 5.9% for 2022. At the time, that was the most significant increase in a decade. Then, they unveiled an unprecedented 6.9% increase for this year.
Decreased inflation rates should mean a less substantial increase for 2024. However, when the carriers band together to set a rate increase, customers don’t have much choice. We expect FedEx and UPS to follow in the realm of 2022’s 5.9% increase later this year.
If you want to save money in 2024, the time to act is now. You can renegotiate your contract anytime, and the ShipRx team knows how to help you reduce your monthly spending and negotiate clauses like rate caps that can protect you from unexpected changes.
It will get more difficult to lock in those rates as we get closer to January 1, 2024, so contact ShipRx today and say “yes” to a free savings analysis. We can usually lower our clients’ rates by 20 – 30% or more, so get in touch today and look forward to lower rates from here on out!
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