UPS Announces U.S. Rate Increases
United Parcel Service, Inc. announced an increase in its Ground, Air, International and Freight average rates, the company has announced these rate hikes a month and a half earlier than last year.
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In earlier fashion than usual, UPS yesterday rolled out United States rate changes that will go into effect in the coming weeks and months.
UPS officials said in a statement that the company continues to make investments in the speed, scope and coverage of its transportation network.
“Rate increases will support ongoing expansion and capabilities enhancements, while UPS strives to maintain the high service levels customers expect,” the company said.
The announced rate changes include:
- UPS U.S. Ground service will increase by an average net 4.9 percent, effective December 26, 2016;
- Daily rates for UPS U.S. Air and International services will increase an average net 4.9 percent;
- UPS Air Freight rates within and between the U.S., Canada and Puerto Rico, will increase an average net 4.9 percent, also effective December 26, 2016; and
- UPS Freight announced an average net 4.9 percent general rate increase effective September 19, 2016
In its 2017 "Selected Daily Rates Surcharge Changes," on the company’s Website, UPS noted that the additional handling surcharge will apply to any package with the longest side exceeding 48 inches, instead of 60 inches for all Air and International packages, with the additional handling charge increasing by $0.35. And it also said that effective January 8, 2017, the additional handling surcharge will also apply to UPS SurePost packages.
UPS and its biggest competitor, FedEx, announced additional handling surcharges last May.
On May 6, UPS said it is changing the measurement that determines whether the UPS Additional Handling charge will be applied to UPS Ground services packages in the U.S. explaining that any package with the longest side exceeding 48 inches, instead of 60 inches, will be assessed the fee and that the additional handling fee of $10.50 remains the same, with the change not impacting UPS Air or International shipments.
“This change is being implemented due to the additional handling required for these types of packages in the UPS network,” UPS said at the time.
An industry stakeholder was blunt in explaining those additional handling pricing hikes by UPS and FedEx, simply saying “they do it because they can.”
Given the ongoing strides e-commerce is making in terms of boosting ground delivery volumes, coupled with the vast UPS-FedEx duopoly continuing to dominate the domestic ground package market, it wouldn’t make sense for them not to raise rates, it seems, he added.
Other notable price increase announced by UPS include:
- the Remote Area Surcharge applied to Alaska will increase $1.00, and for Hawaii will increase $0.25;
- the Large Package Surcharge will increase $2.50;
- the Oversize Pallet Handling Surcharge will increase $3.50;
- the Oversize Pallet Handling Surcharge will increase $3.50
Jerry Hempstead, president of Hempstead Consulting, said that price increase averages are deceiving and that rate sheets and rules need to be issued to see the true impact and effect of these announced rate hikes. And he added that this announcement comes earlier than it has in past years, as in the past UPS has waited until late November to announce rate increases.
“Last year, FedEx signaled rate increases first, and this year they trumped FedEx by 19 days,” he said. “This is big news and is being telegraphed to FedEx.”
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Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman