Jim Haller | Senior Manager, Parcel Spend Optimization | Chainalytics |
As many analysts expected, UPS has raised their rates for the 2018 calendar year, with the increases taking effect, wait for it, December 24, 2017! One has to wonder if this launch date has anything do with the recent Deloitte survey suggesting online holiday shopping will surpass traditional brick and mortar locations for the first time this year. Should this prove to be the case, it’s easy to assume online returns will increase as well, giving Brown a little extra revenue to add to their 4th quarter earnings before the ball drops Dec. 31st. (FedEx increases don’t apply until January 1, 2018).
Keeping in step with FedEx, UPS will increase Ground, Air and International services by an average of 4.9%. Also in conjunction with their primary competitor is a decrease in the dimensional weight equation to 139 cubic inches for all U.S. Domestic services. A Large Package Surcharge will apply to any U.S. Domestic package with a length exceeding 96 inches or a length plus girth exceeding 130 inches. Even more eye-opening is that Overmax Surcharges will cost shippers an additional $350.
But that’s just the first half of the year! Beginning July 8th, extra handling fees of $19.00 will be applied to any domestic package over 70 lbs as well as a $90 Large Package Surcharge to any U.S. Domestic package sent to a residential address.
While the 4.9% average increase appears comparable to other parcel services, shippers need to pay close attention to the specific zone rates for Ground services as some packages will see increases as high as 7%. Finally, area surcharges by zip code, address corrections, intercepts, change requests, return services, weekly pickups and more will all increase by amounts ranging from $0.10 to $9.30, giving UPS the opportunity to literally nickel and dime shippers who utilize their various services.
With the Teamsters contract set to expire July 31, 2018, shippers may see debilitating impacts to delivery times and service levels should both parties fail to make an agreement before the deadline. With less than two months before rates increase, shippers need to evaluate their strategy and service options to avoid significant hits to their 2018 budget.
Chainalytics Senior Manager Jim Haller leads the firm’s Parcel Spend Optimization offering, which enables multi-level organizations to reduce costs, improve service levels, negotiate better pricing agreements and generate cost savings of 8-15 percent on their parcel spend.
Read more about how Chainalytics supports our clients’ parcel spend optimization success:
- (BLOG) FedEx Announces General Rate Increases Across Multiple Services
- (BLOG) The United States Postal Service Increases Holiday Competition with Their Own Peak Season Strategy
- (BLOG) Countering UPS, FedEx Exempts Small Residential Package Delivery from Peak Season Surcharge
- (BLOG) Is the Recent UPS Peak Season Surcharge Announcement Giving You the Christmas in July Blues?