UPS introduces 2024 rate increases

Keeping in line with recently announced rate increases made by its chief rival FedEx, Atlanta-based global freight transportation and logistics services provider UPS this week announced its own 2024 rate increases this week, which are set to go into effect on December 26.

UPS said its pending rate increases include the following:

• the rates for UPS Ground, UPS Air and International services will increase an average net 5.9%;
• the list of ZIP Codes to which Area Surcharges apply will change; and
• the list of ZIP Codes aligned to certain zones will change

The 5.9% increase matches those previously announced by FedEx.

“Daily rates for our services will increase,” said UPS in a customer notice. “This helps to support ongoing expansion and capacity enhancements as we strive to maintain the high levels of service you expect from UPS.”

While the increase is listed at 5.9%, Gordon Glazer, senior consultant for San Diego-based parcel consultancy Shipware LLC, observed in a LinkedIn post that the real impact for shippers will vary.

“We know from experience it will be much higher than the listed increase,” he said. “We expect large increases in accessorials.”

Like FedEx, UPS also announced Demand surcharges, for UPS Air Residential, UPS Ground Residential, and UPS SurePost packages from October 29, 2023 through January 13, 2024.

UPS explained that a Demand Surcharge will apply to certain UPS Air Residential, UPS Ground Residential, and UPS SurePost packages, for customers who are billed for more than 20,000 packages during any week following October 2022. And it added that the Demand Surcharge amounts below will apply on a weekly basis to each package over 105% of the Baseline weekly average volume for each service level, during the specified Demand Period. UPS also said that the highest surcharge amount applicable to the volume in excess of the Baseline weekly average volume in a given week will apply to all packages over 105% of the Baseline weekly average volume in that week within each service level.

A look at the UPS Demand Surcharge ranges provided by Shipware included the following:

• UPS SurePost - $1.35 to $6.40 (+$0.10 to +$0.40 from 2022);
• UPS Ground Residential - $1.35 to $6.40 (+$0.10 to +$0.40 from 2022);
• UPS Next Day Air Residential - $2.40 to $7.50 (+$0.15 to +$0.50 from 2022); and
• All Other Air Residential - $2.40 to $7.50 (+$0.15 to +$0.50 from 2022)

Rick Watson, president of New York-based RMW Commerce Consulting, told LM that these respective rate announcement reflects what he called a pretty standard rate increase.

“Some in the industry have commented with the slack in demand that you might see carriers holding prices firm or even reducing prices,” noted Watson. “I think that turned out to be wishful thinking on the part of shippers.  

When FedEx announced its rate increases, Jerry Hempstead, president of Orlando-based Hempstead Consulting, told LM that he suspected UPS would follow suit to announce its 2024 rate increases, as it will need to pay for its recently-completed contract with the Teamsters, with FedEx then following suite.

“With inflation still high and [likely to] cut into the margin of the announced increase, I’m very surprised FedEx did not go up the 6.9 % they did last year,” he said. “The parcel business is always full of surprises 

As for UPS, he said that history shows it traditionally waits until November around to announce rate increases.

“If it’s their plan to take the 6.9% increase, then it’s best they hide for as long as they can,” he said at the time. “Normally, they try to give customers 30 days advance notice prior to implementing.

It’s rare now that the 30 days is baked in the customers’ contracts. It used to be routine to have ‘prior written notice,’ but those days are gone.” Now the thought process at FedEx and UPS is ‘we do it because we can.’”