UPS Raises Rates

UPS announced a 2.9% rate increase for UPS Ground, Air, 2nd Day Air, 3 Day select and U.S. international services. This is higher than shipper expectations as indicated in a study by Morgan Stanley and published in the November issue of Logistics Today. That study of major parcel shippers showed that shippers expected to pay 1.2% more for UPS Ground service and 2.4% more for UPS Air services.

Continued capacity growth is cited as one reason parcel carriers are not expected to see significant rate increases. Both UPS and FedEx have continued to add capacity in their domestic services and DHL has stepped up its expansion in the market since acquiring Airborne Express.

Shippers, who reported that FedEx trailed UPS slightly on service, said that, on average, they expected rates for ground services to drop by 0.3% and air to increase by only 1.7%.

For larger shipments, UPS said it would increase rates for its Hundredweight Service by 5.9%. This compares with shipper expectations of a 3.8% increase for national less-than-truckload (LTL) and 3.9% for regional LTL.

Fuel surcharges will fluctuate, but, starting in January, UPS set a maximum of 9.5% for air based on an index of the average price for a gallon of kerosene-type jet fuel. A 2% fuel surcharge applied to ground services (including shipments to Canada), will fluctuate after January based on U.S. Energy Department on-highway diesel prices.

Other price increases include a $0.25 rise in the delivery area surcharge on both residential and commercial services to more remote ZIP Codes. The residential surcharge will increase $0.10 for UPS Ground and $0.35 for UPS Next Day Air, UPS 2nd Day Air and UPS 3 Day Select.

Additional optional declared value beyond the $100 limit already provided will cost $0.40 per $100, up to $50,000 per package. Minimum charge for packages valued over $100 but less than $300 will be $1.20.

Shipper anticipated rate increases

Truckload

6%

National LTL

3.80%

Regional LTL

3.90%

Rail Intermodal

4.10%

Rail

4.40%

UPS Ground

1.20%

FedEx Ground

-0.30%

UPS Air

2.40%

FedEx Air

1.70%

Source: Morgan Stanley

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