Shipware Preliminary Analysis: What You Need to Know
United Parcel Service (NYSE: UPS), will increase shipping rates effective December 26th, 2019 by an average of 4.9% for UPS Ground, UPS Air & International services while UPS Air Freight rates will increase by an average of 4.9% on December 27th, 2018. The change will impact the following:
- UPS Daily Package Rates including UPS Ground, UPS Air, and UPS International services
- UPS Alaska and Hawaii Daily Package Rates
- UPS Retail Package Rates including UPS Ground, UPS Air, and UPS International services
- UPS Hundredweight Service Package Rates
- UPS SurePost Rates
- UPS Air Freight Rates
- U.S. Origin UPS Express Freight Premium Direct Rates
In addition, there will be changes to UPS surcharges and minimums also effective on December 26th. Notable of those changes for 2019 include the following:
Here are some highlights from the announcement, showing the changes to some of the more common surcharges, along with the percentage increase. In recent years, the largest increases continued to be reserved for those surcharges related to package size and dimensions, and this year we also see US increasing the Third Party Billing Fee by 80%!
Take a closer look at Additional Handling, Large Package Surcharge and Over Maximum Limits. UPS increased these accessorials during the 2018 General Rate Increase in December 2017 and then again in July 2018, and all 3 are going up again. Additional Handling Weight has increased over 91% in 12 months!
The comparison below of 2018 rates to 2019 rates shows the actual impact by service and weight break. In many cases, the actual increase is over 5% – even as high as 9.34%!
An analysis by zone reveals that the increases deviate from the 4.9% mark quite a bit. SurePost<1lb is taking the biggest hit with zone 2 increase of 9.87%.
This year, UPS is giving its customers only 3 weeks’ notice of the 2019 increase whereas many contracts state that there must be a period of 30 days’ notice. Some of the most notable changes in 2019 will be the following:
- Fuel surcharges will now apply to more surcharges than ever before. Included among those are Additional Handling, Over Maximum Limits, Signature and Adult Signature Required.
- Fuel surcharges are scheduled to increase, but details won’t be available until 12/27/2018.
- UPS will charge a processing fee when Package Level Detail (PLD) is not provided to them prior to delivery.
Both UPS and FedEx continue to create a more complex pricing environment year over year. Many shippers understand that there is usually very little correlation between the carriers’ announced average increase and the actual increase by service level, zone and weight. The impact to their parcel budget can vary significantly from the announced average increase depending on their shipper profile. A more thorough analysis by Shipware’s team of consultants will be forthcoming.
These increases will significantly impact each shipper; however, the increase in overall cost will vary per each shipper’s unique shipping characteristics. Please contact us if you would like a custom analysis to understand the exact impact these changes will have on your business.
