We’re seeing a lot of changes in the way carriers are structuring their pricing and surcharges.
From FedEx’s recent surcharge structure change to this most recent change from UPS, it seems that carriers are trying to cope with the ever-changing shipping environment.
In the last few weeks, UPS made some significant changes to its pricing that will have significant impacts on shipping prices.
There are 3 main pricing changes that, relatively under-the-radar, occurred in the last few weeks.
1. Fuel Surcharge Changes
Starting October 1st, fuel surcharges for both domestic ground and air have been increased by .25%.
While a seemingly insignificant number, .25% will definitely impact your transportation costs in a meaningful way.
Besides the fact that fuel prices themselves are increasing, the overall costs involved in shipping are increasing as well.
2. New SCC Audit Fee Structure
At the end of October (2018), shippers will notice that the tolerance for shipping charge correction will go from $5.00 all the way down to $2.00.
This represents a massive decrease in the margin of error for shippers.
In addition, the total fee for audits will end up being much higher.
3. Peak Season Comes Early
Back in July, we reported that ports in the United States were seeing numbers that indicated that peak shipping season was coming much earlier than previous years.
It seems that UPS was seeing similar numbers.
As a result, UPS has moved up its peak surcharges for over max limits by over a month.
Shippers will now see the fee increase to $815 (from $650) starting October 1st.
These changes beg the question: why now?
As we reported in September, FedEx made changes to its surcharges recently as well.
The FedEx change was centered around separating import and export surcharges; they were historically the same.
There are a variety of potential reasons that we are seeing so many changes, in such a short period of time, from the big carriers.
With all the various global tensions around trade and tariffs, there’s a great deal of uncertainty felt by shippers and carriers alike.
Uncertainty will always lead to greater costs because it creates a greater level of risk.
Rising Fuel Costs
The price of crude oil, the raw form of the fuels that power the trucks, ships, and planes carriers use has spiked.
It’s currently at its highest point in over 3 years.
As has been widely reported, trucking companies and carriers are finding it harder and harder to fill the driver seats of their trucks.
In a hot job market, with so many opportunities out there, driving a truck doesn’t really appeal to young job seekers.
In order to lure more people to these positions, carriers are working to increase salaries and benefits.
It’s likely that these additional costs will be passed, at least in part, to shippers.
Potential for a Huge Holiday Season
Consumer confidence in the US economy is at near all-time highs.
With holiday shopping season right around the corner, it looks like we are on pace for one of the most active seasons in history.
Additionally, shopping is increasingly being done online, rather than in-store. As a result, carriers see greater and greater pressures with each new holiday season.
With rising costs and more complexity in pricing models, it’s never been more important to work with an auditing partner.