Effective December 24, 2017, shippers should expect an average rate increase of 4.9%
The United Parcel Service (UPS) has announced its 2018 rate increases on October 25 saying that it would raise rates across UPS Ground, UPS Air, International Services and Air Freight by an average of 4.9%. This rate increase is similar to the United States Postal Service (USPS) and FedEx’s 2018 average rate increases. However, USPS and FedEx’s increases will be put into effect in January, whereas UPS’s rates take effect December 24 of this year.
This might catch shippers a bit off-guard, since UPS forecasts that 750 million packages will be delivered between Black Friday and New Year’s Eve, an increase of 5% from 2016. Additionally, the price of shipment prior to the holidays will differ from the holiday return season. Keep this in mind.
Here are a list of UPS’s notable increases starting December 24 that affect parcel shippers:
- For Shippers Who Ship Oversized Packages: The Large Package Surcharge (which applies to packages exceeding 96 inches, as well as packages with girth plus length greater than 130 inches) will increase 14.3% to $80. The Additional Handling Charge for these packages will increase 10.6%, and the Over Maximum Limits Charge will increase 233% to $500 (yikes).
- For Shippers Who Ship Smaller Packages and are Concerned about Dimensional (DIM) Weight: UPS’s DIM weight divisor will be decreasing from 166 to 139 for small packages less than one cubic foot. The new DIM divisor will now match packages over one cubic foot, and remove a key advantage for UPS.
- For Shippers Concerned with Address Validation: UPS’s Address Correction Charge will be increasing 18.7% to $15.90.
- For Shippers who Ship UPS Ground: The Minimum Net Charge for Ground Packages will increase 3.42% to $7.57.
- For Shippers who Ship UPS Air: Lower priced UPS parcel air services (2nd Day Air A.M. (5.26%), 2nd Day Air (5.91%), and 3 Day Select (5.77%)) will increase at a higher rate than premium service options (Next Day Air Early (4.18%), Next Day Air (4.91%) and Next Day Air Saver (4.67%)).
- For Shippers Concerned with Value-Added Services: Fees for value-added services such as additional pickup and delivery services will increase at a higher rate. Delivery Area Surcharge (Air and Ground Extended Residential) will increase by 5%, Delivery Confirmation will increase by 12.5%, the Residential Surcharge will increase by 9.6%, Daily Pickup (<$75) increases by 6.4%, and Daily On-Route Pickup (<$75) will increase by 7%.
- For Shippers Concerned about the 2018 Peak Season: UPS will only raise surcharges for residential packages by a few cents. The surcharge for UPS Next Day Air packages will increase by 2 cents to $.84, while the peak surcharge for UPS Ground packages will increase to $.28 cents from $.27 cents. UPS will also apply a new 2018 peak season surcharge for additional handling of large/awkward packages of $3.15.
- For Shippers Concerned with Hazardous Materials: UPS will raise the Hazardous Materials, Air, Accessible Goods surcharge from $45.00 to $48.00, a 6.67% increase.
- July 2018: UPS will raise the additional handling cost for packages weighing over 70 pounds to $19 from $12 and raise the additional handling charge for large packages to a residential address to $90 from $80.
ProShip is a UPS Ready Shipping Solution, meaning that we offer direct interfaces with the entire UPS shipping software product line.
ProShip customers can take advantage of new carrier services, enhancements and upgrades directly from the ProShip Product Suite. Once the new 2018 rates are made available, customers utilizing automatic updates will receive these updates without intervention. If customers are utilizing negotiated rates within ProShip, they would need to apply them to the 2018 UPS published rates to make sure rating is still accurate based on contracted price. ProShip is always happy to help with this.
Companies who ship parcel need to be concerned with not only the announced average increase, but also the actual increases for certain parcel services, surcharges, weights and sizes. A budget can be significantly impacted by increases from UPS, USPS and FedEx alike. No matter what carrier(s) you use, businesses need to investigate their shipping mix to determine if they’re making the right shipping decisions in 2018.
Did you know that “rate changes” is the number one carrier-related shipping concern?
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