FedEx and UPS rates will increase by 8%-10% in 2023!

FedEx and UPS shipping rates are expected to rise 8% to 10% through 2023 once rates and various “add-ons” or additional charges are taken into account, according to an annual forecast released Monday by consulting firm TransImpact LLC.

The consultancy said both have announced record-breaking 6.9% general rate increases (GRI) for 2023. While rates will vary by product, overall they will reach new highs.

UPS's three-day rates will be about 15% lower than FedEx's, a margin it has maintained for years. UPS will also offer next-day delivery at a discount to FedEx's rates on the U.S. and most international routes.

TransImpact said FedEx will offer lower prices than UPS on the carrier's slowest and cheapest ground service. UPS's SurePost service is managed in conjunction with the USPS service, which delivers UPS packages to homes over the last mile. FedEx once had a similar service called Smart Post, which it internalized into a service called Ground Economy.

TransImpact said FedEx's pricing advantage in focusing on shipping packages weighing 1 to 13 pounds will be FedEx's magic weapon to win over UPS and USPS.

TransImpact said FedEx's next-morning and next-afternoon delivery prices are also competitive, though the price advantage will be less pronounced for heavier packages. FedEx's minimum domestic charges will also be lower than UPS's.

TransImpact said that while there will be some differences depending on the specific surcharges, the overall delivery surcharge increases for the two carriers will not differ much.

According to TransImpact, both airlines will retain the per-pound international delivery surcharges through 2023, although the main reason they were initially implemented was to create a profit buffer to overcome the impact of reduced air cargo capacity in the first two years of the pandemic.

FedEx has been hit by high double-digit increases in labor costs at its FedEx Ground unit since 2021. UPS, by contrast, has been immune to surging labor cost inflation because its 2018 contract with its employee union's 380,000 members has locked in relatively modest payouts that have increased over the past five years.

Editor ✎Estella/

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