General Rate Increases. Pain or Opportunity?

At the beginning of every year we start hearing the same familiar news: “FedEx Announces General Rate Increase of 5.9%” or “Old Dominion Files a GRI of 4.4% effective January 18th”. A General Rate Increase is the average amount in which a carrier increases its prices. The increase is usually to cover the increase of tariffs or labor costs. The definition of a GRI is pretty straight forward, but how it affects your company is not so simple.

For example, is a GRI that averages 4% in reality, a 12% increase to you because of your shipping needs? Seeing how inbound and outbound transportation costs can account for up to 50% of a shipper’s logistics expenses it’s worth taking the time to digest and understand the impact of GRIs on your business.

So, the annual GRI’s don’t have to be the proverbial thorn in your company’s side. Rather, they can be yearly reminders to examine your carrier selections, rate structures and processes to optimize your transportation management function.