UPS & FedEx Rate Hikes: Part II

Spend Matters welcomes another guest post from NPI, a spend management consultancy focused on delivering savings in the areas of IT, telecom, transportation and energy.

You may have read my post last week on the outrageous rate increases recently announced by FedEx, and partially announced by UPS. This morning, the transportation spend management team here at NPI saw the full list of rate increases from UPS. The bottom line? Get ready -- these are going to pack a powerful punch. Here are the most heavy-hitting rate hikes:

  • Residential Surcharge Ground: The surcharge for residential ground deliveries is up 11.36% over last year.
  • Residential Surcharge Air: The surcharge for air deliveries to residential destinations is up 10%.
  • Extended Delivery Area Surcharge: The surcharge to ship to certain recipient zip codes is up 9.09% for residential deliveries and up 8.82% for commercial.
  • Ground Minimums: There's a minimum charge for ground shipments. That charge is up 6.82% over last year.
  • Ground Rates for Low-Weight Packages: The average increase for the cost to ship low weight packages (1-10 lbs) is 7.6%. Companies that ship large volumes of 1-5 lbs packages will be hit hardest.
  • Long Zone Air: As I mentioned in the breakdown of long zone air charges in last week's post, don't believe the headlines on average rate increases. In the areas where shippers most frequently use long zone air, the average price increase will be as much as 9.5%.

Big shippers like retailers, manufacturers and distributors need to brace themselves for the year ahead. With a combination of historical rate hikes from carriers, a tepid economic climate and oil climbing to $100 a barrel, the environment for shippers is tense.

My advice? Fully understand how these carrier rate increases will impact your shipping spend. For some shippers, it could be the difference between economic recovery or relapse.

-- John Haber, EVP of Transportation, NPI

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