Not long after FedEx announced its rate increases for 2016, UPS followed suit with similar average rate increases for the New Year, some of which are already in effect. As of October 26th, rates for UPS Freight, the company’s less-than-truckload segment, have increased 4.9 percent, and UPS Air and International services increased by an average net of 5.2 percent.
Additionally, UPS will also boost surcharges for fuel and heavy packages. The fuel surcharge on ground shipments will rise from its current 4.75 percent to 5.25 percent on November 2nd. For air and international packages, the surcharge will go from 3 percent to 4.5 percent. Lower fuel prices coupled with the boosted surcharges lowers UPS’s expenses and significantly increases company profits.
As with FedEx’s announced rate increases, it is important to remember UPS’s average rate increases are just that – averages. At a glance, these figures can be misleading, as some rates have in fact increased higher than their average percentages. Additionally, it’s important to take shipment dimensions into consideration (as of December 28th, large package surcharge will run you $10.00 per package). Given the tendency of many companies, and especially e-commerce shippers, to use dimension-inflating filler materials in packaging, increased strictness on the dimensions preferred by both UPS and FedEx will likely cause businesses to find more economic ways to ship their products. Now is the time to reevaluate your packaging procedures. You will have to weigh the benefits of thoroughly protecting a package’s contents with the disadvantage of the increased cost of doing so.
If you’re shipping with UPS, Intelligent Audit will help you understand the full impact of these rate increases. We’ll work with you to help formulate strategies that will allow you to get the best possible rates when shipping with UPS. Contact Intelligent Audit today to leverage our industry expertise in planning a strategic response to UPS’s rate increases.
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