UPS Signals More Uncertainty, Capacity Strains Through 5.9% 2022 GRI

UPS Signals More Uncertainty, Capacity Strains Through 5.9% 2022 GRI

ups_general_rate_increases

Less than one week ago, the industry learned of FedEx’s decision to suspend its Money-Back Service Guarantee, and now UPS has announced its 2022 GRI that will match FedEx. With peak season pressure mounting, stories of surcharges fill the internet. There are not enough containers. The Biden Administration is releasing stockpile minerals and raw materials. And there are many uncertainties on the horizon. However it is also equally important to not lose sight of other charges that are evolving. UPS has now announced its intention to match the FedEx GRI of 5.9% for January 2022. Shippers need to understand what this means for the state of logistics going into the post-peak season and how analytics can once again curb mounting expenses.

What Is the New GRI and When Does It Take Effect?

Over recent years, GRIs (general rate increases) have become commonplace, averaging approximately 4.9%. However, the increased demand on resources has led to an above-average GRI for 2022. According to the parcel giant, “The rates for UPS® Ground, UPS Air and International services will increase an average net 5.9%.” This is in tandem with peak surcharges gaining a new name as “Peak/Demand Surcharges” and the list of ZIP codes affected by such surcharges changing. All ZIP code changes are accessible here.

The higher GRI is not unexpected. Industry insider and expert Nate Skiver, founder of LPF Spend Management, posted this via LinkedIn: “The increased RPP is due primarily to service mix (more commercial, less Resi and SurePost as % total) and pricing (higher YOY peak surcharges, “repricing” of large accounts). The upcoming GRI (TBA this week) effective at the end of 2021 will have an average base rate increase of 5.9% (similar to FedEx), higher than the 4.9% average increase over the last several years.” These surcharges are also in tandem with the peak season surcharges announced by UPS earlier this year. However, UPS also announced new peak season surcharges October 29that are set to take effect on November 7 as follows:

Shipments from China Mainland, Hong Kong SAR and Macau to the US:

  • UPS Worldwide Express Plus®, UPS Worldwide Express®, UPS Worldwide Save®, UPS Worldwide Expedited® – $1.81 per pound.
  • UPS Worldwide Express Freight® and UPS Worldwide Express Freight® Midday – $2.61 per pound.

Shipments from Vietnam to the US:

  • UPS Worldwide Express Plus®, UPS Worldwide Express®, UPS Worldwide Save®, UPS Worldwide Expedited® – $0.68 per pound.
  • UPS Worldwide Express Freight® and UPS Worldwide Express Freight® Midday – $2.61 per pound.

Shipments from Japan to the US:

  • UPS Worldwide Express Plus®, UPS Worldwide Express®, UPS Worldwide Save®, UPS Worldwide Expedited® – $0.45 per pound.
  • UPS Worldwide Express Freight® and UPS Worldwide Express Freight® Midday – $0.68 per pound.

Shipments from Australia, New Zealand and Other Asia origins to the US:

  • UPS Worldwide Express Plus®, UPS Worldwide Express®, UPS Worldwide Save®, UPS Worldwide Expedited® – $0.57 per pound.
  • UPS Worldwide Express Freight® and UPS Worldwide Express Freight® Midday – $1.47 per pound.

Shipments from Europe to the US:

  • UPS Worldwide Express Plus®, UPS Worldwide Express®, UPS Worldwide Save®, UPS Worldwide Expedited® – $0.11 per pound.
  • UPS Worldwide Express Freight® and UPS Worldwide Express Freight® Midday – $0.34 per pound.

As a final note, all other peak surcharges, implemented based on the February 2020 volume thresholds will remain the same. These include surcharges ranging from $1.15 per package to $6.15 per package across UPS SurePost, UPS Ground Residential, UPS Next Day Air Residential and All Other UPS Air Residential Services as follows:

Service Level 110%-200% of Feb. 2020 Volume >200%-300% of Feb. 2020 Volume >300%-400% of Feb. 2020 Volume >400%-500% of Feb. 2020 Volume >500% of Feb. 2020 Volume
UPS SurePost $1.15/package $2.15/package $3.15/package $4.15/package $5.15/package
UPS Ground Residential $1.15/package $2.15/package $3.15/package $4.15/package $5.15/package
UPS Next Day Air Residential $2.15/package $3.15/package $4.15/package $5.15/package $6.15/package
All Other UPS Air Residential $2.15/package $3.15/package $4.15/package $5.15/package $6.15/package

What Can Shippers Do About the New UPS GRIs?

Let’s face facts. The various surcharges and evolving state of e-commerce have created many new challenges in logistics. Among these, finding ways to keep spend in check is absolute, and shippers can achieve that goal by:

  • Aggregating data from all systems of record.
  • Normalizing data in preparation for analyses.
  • Deriving actionable insights that help to avoid costlier lanes and shipping modes.
  • Working with an expert that helps your team turn those insights into action.
  • Streamlining payment processing with a secure and digital resource.
  • Variety is certainly the spice of logistics, and variety will give shippers new opportunities for savings despite the above-average GRIs and surcharges in shipping.

Still, the best-laid plans can fall by the wayside without an eye on the prize. In other words, it’s the comprehensive view of all moves, whether through UPS, FedEx or another carrier, as well as across all modes, including parcel, that can save the most revenue. Here’s the good news. While total net increases are expected to hit 5.9%, rates for air cargo should be closer to the prior year’s increases. According to UPS, “Effective December 26, 2021, the rates for UPS Air Freight within and between the U.S., Canada and Puerto Rico will increase an average net 5.2%.” That fact alone will evolve into an even greater consideration to take when thinking about zone skipping and going by ground versus air when costs are under the microscope through peak season and into 2022. 

Know What’s Happening in the Industry With Data Insights That Work

Shippers need to know the reality of the GRIs expected within the industry, plan for higher spend regardless of which carrier is used, and follow the steps outlined above. Also, remember to connect with Intelligent Audit to get started immediately, even though peak season is likely top of mind.

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