We'd like to thank Doug Caldwell from AFMS Global Logistics for this guest post. For more information on this topic and its specific impact on your organization, Doug can be reached at doug(dot)caldwell(at)afms(dot)com.
For the First Time, FedEx Sets the Bar-But Will UPS Follow?
After the market closed on Tuesday, FedEx announced their 2015 rates, with 4.9% average increases for Ground, Express and LTL shipments, which will be effective Monday, January 5th. However, FedEx also pulled off a bit of a surprise, one-upping UPS in the process. Every year going back to 1998, when Fred Smith acquired Roadway Package Systems and rebranded it as FedEx Ground, UPS would set the ground rates each fall, which were then matched-penny for penny-by FedEx each year. But this year FedEx announced the ground rates first-and the big question is will UPS follow suit, and mirror the FedEx Ground rate chart for 2015? At least one top Wall Street transportation analyst thinks that UPS might pull a game changer, and post rates that are slightly lower than their rival in the next month or so.
About those 4.9% averages
In typical fashion, the “averages” are just that, and most shippers will find themselves in the same boat as Garrison Keillors fictional Lake Wobegon students, all of whom are above average. As an example, the heavily used 1-5 lb ground rates are up 6.4%, while the seldom used 140-150 lb rates are up just 1.7%. As in past years, most of the common add-on charges, such as residential, address correction, rural, additional handling and a slew of others, are seeing annual increases in the 4-6% range.
Ground dimensional changes are on the way
The FedEx announcement follows on the heels of their May bombshell, where they announced that all packages, not just those over 3 cubic feet, will be subject to dimensional charges in 2015. UPS later announced that they would do the same. We estimate that just 15% of UPS and FedEx Ground shipments are over 3 cubic feet.