UPS rolls out planned 2020 rate increases

Earlier this week, Atlanta-based freight transportation and logistics services bellwether announced published rates for 2020.

UPS officials said these new rates will go into effect on December 29, 2019, saying “the published rates for our services will increase. This supports ongoing expansion and capability enhancements as we strive to maintain the high service levels you expect from UPS.”

UPS said that the changes below will take effect on December 29, 2019:

• rates for UPS Ground, UPS Air and International services will increase an average net 4.9%;
• a rebill fee will be assessed for each request to change the billing account for a shipment;
• a prohibited Item fee will apply to packages containing prohibited articles or restricted articles not in compliance with all UPS policies and procedures and applicable laws and regulations if found in the UPS system;
• value-added services and other charges will apply to undeliverable packages returned to the shipper;
• UPS reserves the right to assess a late payment fee in an amount set forth in the UPS Tariff/Terms and Conditions of Service if an invoice is not paid in full by the invoice due date; 
• the weight threshold for applying an Additional Handling surcharge will be lowered from 70 pounds to 50 pounds actual weight for UPS Ground and UPS Air services.
• the list of ZIP codes to which Delivery Area Surcharges and Extended Area Surcharges apply will change;
• a processing fee will apply to each request to file a single entry under Entry Type 86 for a shipment that normally qualifies for U.S. customs clearance under a consolidated manifest; and
• the rates for certain value-added services and other charges will increase

The UPS 2020 rate increases come roughly two months after its chief rival, FedEx, announced its own 2020 price hikes that are set to take effect on January 6, 2020. FedEx said at the time that FedEx Express, FedEx Ground, and FedEx Freight surcharge changes are set to take effect in January 2020, which include: applicable services, criteria and pricing for FedEx Express and FedEx Ground packages that require additional handling or are oversized will change; there will be changes to applicable surcharges for FedEx Express and FedEx Ground fuel surcharge assessment; and applicable criteria for the FedEx Freight Capacity Load minimum charge will change. The list of Delivery Area Surcharge ZIP Codes for FedEx Express, FedEx Ground and FedEx SmartPost will also be changed effective January 6, 2020, and details of all changes to rates and surcharges are available at: http://fedex.com/rates2020.

And also in September DHL rolled out 2020 price adjustments that will go into effect on January 1, 2020, including: an average rate increase of 5.9%.

DHL officials said that prices are adjusted on an annual basis by DHL Express and take into effect things like consideration inflation and currency dynamics like administrative costs related to regulatory and security measures.

An analysis from Matt Bohn, senior consultant, professional services, for San Diego-based parcel consultancy Shipware LLC explained that there is often a discrepancy between the announced general rate increase and the effect that the increase has on individual shippers.

Addressing the UPS rate increases, Bohn explained that longer zone UPS Air services will take larger increases, while all ground zones will take similar increases.

“Shippers are more likely to utilize longer zones in the express network, as the ground networks become more efficient in accommodating 1-2 day transit times in the lower zones, so it is likely that heavy UPS air shippers will take larger increases,” Bohn wrote.

And Bohn noted that two- and three-day shipping have larger increases than other services, which will negatively affect shippers with day-definite, but not overnight, shipping needs. These increases, Bohn stated, are consistent across weights for air services, but generally increase by weight for ground services.

Among other takeaways of UPS’s announcement identified by Bohn included how the ground minimum package charge has gone up 4.84% to $8.23, which he said “mirrors FedEx.”

Other things in line with FedEx, he observed, are that SurePost increases are much lower from 1-9 pounds, at 2.2%, than at 10-plus pounds, at 5.3%, which will allow the UPS SurePost rates to be better positioned to compete with FedEx SmartPost list rates, with SurePost rates roughly 3-4% higher from 1-9 pounds.

In terms of how these rate increases will impact individual shippers, Bohn said that the general rate increase will affect some shippers more than others.

“If you’re a shipper that routinely uses two or three day, long-zone express, or ships to remote areas, it is likely that you will be subject to an increase much larger than the stated 4.9%,” he wrote. “As is the case with each annual rate increase, it is vital to understand how all changes combined will impact your individual characteristics and, ultimately, your overall shipping costs.”