Upping the ante: Why the 2017 GRI increases the urgency to reevaluate your Parcel Contract

By Victor Zhou

With the increasingly unpredictable moves made by the carrier duopoly over the last few years, the 2017 GRI presents unique challenges for shippers trying to quantify their known and unknown anticipated impacts to spend. Both FedEx and UPS continue to break from established norms and patterns from the last few years, passing the volatility and uncertainty of their moves from their pricing departments to their customers, the small parcel shipper.

UPS jumped the gun this year in announcing their rate increases before FedEx (and with effective dates a week earlier on December 26, 2016), a break from prior years’ tradition, but FedEx made the biggest waves by announcing a change in their dimensional weight divisor from 166 to 139 for all Domestic Express, Ground and Home Delivery Services. This represents a significant increase for most shippers in addition to the usual General Rate Increase (GRI). For example, a package measuring 27 x 14 x 12 coming in at 28 lbs for its dimensional weight in 2016 will now incur tariffs at 33 lbs in 2017; for a Zone 8 Ground Shipment at 2017 tariffs, this represents an increase of 13.7% of transportation costs on top of the already increased 2017 GRI tariffs!

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