Costs Soar as UPS Targets Manhattan ZIP Codes with Delivery Area Surcharges

As UPS struggles to maintain cost-effectiveness in a stubbornly low-volume parcel environment, the carrier is adding new delivery area surcharges (DAS) to bolster revenue from key ZIP codes. The latest addition to UPS’s list of additional delivery area surcharge ZIP codes includes several high-volume Manhattan ZIP codes. With New York City residents receiving some 2.4 million packages per day, the new DAS is already resulting in significant increases in shipping costs for businesses in Empire City.

What is a Delivery Area Surcharge?

DAS is a surcharge levied against shippers by carriers. Generally speaking, DAS is applied to shipments outside of a carrier’s typical service area. In the past, DAS has  been primarily limited to rural areas where carriers are forced to incur longer transit times and more significant logistical hurdles for package delivery. Additionally, DAS has historically been applied when shipping to remote areas, including Alaska and Hawaii.

While DAS has been an effective means of offsetting the significant costs associated with delivering to rural and remote areas, recent additions to major carriers’ DAS ZIP code lists have garnered substantial criticism from shippers, who claim that the surcharges are less a means of mitigating higher delivery costs to out-of-the-way ZIP codes than a strategy to bolster revenue during a difficult inflationary and volume-starved parcel environment.

NYC Delivery Area Surcharges Cause Significant Spike in Shipping Costs

One common criticism of DAS is carriers’ ability to add ZIP codes to their DAS list without regard to previously established contractual rate caps, as well as add new ZIP codes without further negotiations with shippers.

As one major shipper in the educational publishing space recently experienced, these unexpected DAS additions can have a pronounced impact on transportation costs. In three key Manhattan ZIP codes, the shipper witnessed significant increases in shipping costs due solely to the implementation of DAS.

  • In the 10012 ZIP code, which spans SoHo and Greenwich Village on the island’s lower half, the shipper saw an increase of $11,991.86 in shipping costs due to DAS.
  • In the 10011 ZIP code, which extends from Chelsea to Union Square on the east side of Manhattan, the shipper saw an increase in shipping costs of $1,619.80.
  • In the Hell’s Kitchen ZIP code of 10019, the shipper saw transportation costs increase by $1,226.42 due to added DAS.

UPS’s new DAS listings were not limited to Manhattan. Nationwide, this shipper expects to see an increase in transportation spend of $125,996 due solely to added delivery area surcharges, calculated using 2023 volumes. This spend comes in addition to the previously instituted 8-9% annual increases in accessorial surcharges.

As shippers contend with higher transportation costs, many are struggling to balance operational costs without passing the increased costs onto customers. However, smart shippers are turning to experts to mitigate the fallout from carrier rate hikes.

As Rates Rise, Smart Shippers Partner with the Experts

In the face of escalating transportation costs driven by carrier rate hikes and surcharges, smart shippers are seeking strategic partnerships to navigate these challenging times. Through a partnership with Intelligent Audit, shippers can build the cost-resilience needed to maintain operational effectiveness in a volatile parcel industry.

Strategic Negotiation Support

Intelligent Audit provides shippers with expert negotiation support as carriers implement rate increases and surcharges. Leveraging industry insights and data analytics, Intelligent Audit helps shippers navigate contractual rate caps, ensuring newly added delivery area surcharges align with established agreements. This proactive approach empowers shippers to engage in informed negotiations with carriers, safeguarding against unexpected cost spikes.

Data-Driven Decision-Making

Intelligent Audit's advanced analytics tools offer shippers a data-driven approach to decision-making. Shippers can identify cost-saving opportunities by analyzing shipping and logistics data, optimizing shipping strategies, and uncovering potential inefficiencies. This strategic use of data ensures that shippers can adapt to the evolving landscape of carrier rate structures, making informed choices to maintain cost-effectiveness.

Proactive Cost Recovery

In a landscape where unexpected costs can impact the bottom line, Intelligent Audit's proactive cost recovery services become invaluable. The platform's anomaly detection capabilities scrutinize invoices for errors, overcharges, and inaccuracies. By identifying discrepancies, Intelligent Audit not only prevents erroneous billing but actively pursues the recovery of funds. Shippers can rest assured that they are not only avoiding unnecessary expenses but are also reclaiming funds that may have been incorrectly charged, contributing to overall cost mitigation.

Ready to Build Resilience in Your Transportation Budget? Get Started with Intelligent Audit

With over 25 years at the cutting edge of supply chain innovation, Intelligent Audit is the smart shippers’ choice for data-driven resilience in a dynamic transportation environment. Through a partnership with Intelligent Audit, shippers can access an invaluable array of software tools to help build visibility over fast-changing transportation budgets:

  • Freight Audit Software simplifies complex freight audit processes.
  • Anomaly Detection leverages recent innovations in machine learning to ensure maximum visibility over disruptions.
  • Business Intelligence helps shippers make the most of their transportation spend in an increasingly dynamic logistics environment.

Get started with Intelligent Audit, and see what 25 years of supply chain innovation can do for your business today.

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