Effective December 29, 2014, the published rates for UPS services will increase. UPS Ground, Air and International rates will increase an average net 4.9%. UPS air freight rates within and between the U.S., Canada, and Puerto Rico will increase an average net 4.9%. UPS Freight tariffs for shipments rated on the current UPS Freight 560 (US48), 525 (to and from Canada) and 570/571 (to and from Mexico) will increase an average net 4.9%.
However, average increases can be misleading. As an example, all UPS air products will realize an actual rate increase significantly higher than the overall 4.9% average announced. Shipware has prepared the table below to demonstrate the impact of the actual rate increase average for UPS air products.
Similarly, the actual rate increases for Ground services are above or below the 4.9% average depending on shipment weight. Rates for lightweight packages will increase much more significantly than heavier packages. See table below:
Approximately 75% of all UPS Ground shipments weigh less than 30 pounds, and therefore, most shippers will realize rate hikes well above the announced average. In addition, the 2015 Ground Minimum Charge will be $6.61 (up 5.9% from $6.24).
Perhaps more impacting than the general rate increases is UPS’s decision to rate all Ground packages by dimensional weight next year. Currently, both parcel carriers only apply dimensional weight pricing only to Ground packages measuring three cubic feet (5184 cubic inches) or greater.
Regarding the change to dimensional pricing for Ground packages, UPS foresees benefits for shippers as well as the environment. The UPS website states, “as a result of the dimensional weight pricing method, more shippers will seek to optimize their packaging practices. These efforts will reduce excess packaging materials and overall package sizes, leading to related reductions in fuel use, vehicle emissions and transportation costs.”
While arguably true, make no mistake about it. These changes will amount to one of the largest rate increases in the history of the parcel industry. The majority of Ground Residential packages are less than three cubic feet. Shipware estimates that 35-50% of all UPS Ground packages (commercial and residential) will be adversely impacted by the new rules.
It is also noteworthy that UPS Freight (LTL), which historically has taken its rate increase the first week in April, will implement its rate increase on December 29, 2014 to coincide with the rest of the UPS product portfolio. Of course, exercising the increase three months earlier lends tremendous financial benefit to UPS by shifting millions of dollars away from shippers earlier in the year. This year’s average increase of 4.9% tops the 2014 average increase of 4.4%.
Accessorial charges for all services are also increasing. Increases are shown in parentheses (partial list): Additional Handling Service ($.25), Address Correction ($.15), Delivery Area Surcharges ($.10 to $2.50), COD ($.50), Customs Brokerage ($2.50), Delivery Confirmation ($.10 to $.13), Delivery Intercept ($.15 to $.50), Large Package Surcharge ($.90), On-Call Pickup ($.15 to $.50) Over Maximum Limits ($5.85), Residential Surcharges ($.15 to $10.00).
Shippers interested in determining the exact impact of these rate increases for their unique distribution should contact me at email@example.com.