Shipping Patterns Affect Carriers’ Stated Rate Increases

Jan. 25, 2013
Report shows percentage increases greater than the average of 4.9% the carriers quote.

Both FedEx and UPS announced their annual rate increases. FedEx increased air and ground rates by 5.9% and say they are partially offsetting these increases with a reduction in fuel surcharges, 2% for air and 1% for ground. UPS increased air rates by 6.5% and ground rates by 5.9%. They have partially offset these increases by reducing the fuel surcharge for air by 2% and ground by 1%.

After you net out the fuel surcharge reductions does this really mean your increase for FedEx is 3.9% for air and 4.9% for ground and your increase for UPS air is 4.5% and ground 4.9%?

No, answers a report from the Data2Logistics Professional Services Group.

“We find that in most cases the impact to our clients is higher and this is due to their shipping patterns,” the report states. “The parcel carriers use an average when calculating these percent increases, but the impact to [shippers] will vary based on [their] shipping patterns.

Looking at FedEx & UPS ground increases and netting fuel surcharge reductions, the average increase for 1-5 lbs. across zones is 7.34%, the report states. The average increase across zones for 1-10 lbs. equals 7.19% and 1-20 equals 6.51%. These percentages are much greater than the average of 4.9% that the carriers report, the authors state.

With FedEx 2 Day the report finds an average increase across zones for 1-5 lbs. of 5.05% and 5.11% up to 20 lbs.

While the ground published tariff is the same for UPS and FedEx, the air is not. FedEx’s tariff is a bit higher. For example, on average using zones 2-8 from 1-20 lbs. it is as follows:

∙ 2 day, FedEx is 3.07% higher

∙ 3 day, FedEx is 14.82% higher

∙ Next day by 10:30AM, FedEx is 2.96% higher.

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