UPS Announces 2016 General Rate Increase of 4.9% to 5.2%

Effective December 28, UPS Ground rates and accessorial charges will increase by an average net 4.9 percent. UPS Air and International services and accessorials, including UPS Air Freight rates within and between the U.S., Canada and Puerto Rico, will increase an average net 5.2 percent. UPS Freight rates will increase an average net of 4.9 percent, effective October 26, 2015.

Effective December 28, the Standard List rates will be combined with the Daily rates and will be published under the name Daily rates.  Customers with Standard List rates should reference the combined Daily rates.

Effective November 2, the surcharge will increase for Over Maximum Packages and the tables for Ground, Air and International fuel surcharges will be updated.  Effective January 4, 2016, there will be a charge for UPS’s Third-Party Billing Service.

The index for determining UPS’s U.S. Ground Fuel Surcharge and for UPS’s Air and International Fuel Surcharge will change effective November 2, 2015. For details, go to ups.com/fuelsurcharge.

For additional information and to review the new 2015 and 2016 rates, visit www.ups.com/rates. Customers can download the full 2016 UPS Rate and Service Guide beginning December 28, 2015.

Shipware Analysis of UPS Announcement

UPS mostly followed the FedEx rate increase.  Air & International going up 5.2%, slightly higher than FedEx’s 4.9% average, but that was expected for two reasons:  1) The UPS Daily Rates in 2015 were less expensive than the FedEx published rates; 2) It follows a historical trend in that UPS has increased air rates slight above FedEx in each of the past several GRI’s.

Ground pricing seems to match FedEx exactly, as do many accessorial increases including an increase of $52.50 to the “Over Maximum Limits” fee (the new rate will be $110.00).

It’s also important to note that UPS will implement the 2016 pricing on Dec 28, 2015, a full week ahead of FedEx.  Finally, UPS Freight (LTL) pricing is also increasing an average of 4.9% effective Oct 26, 2015.  (To date, FedEx has NOT announced increases at FedEx Freight.)

What’s surprising is that UPS is again increasing its fuel surcharge effective Nov 2, 2015.  Where FedEx’s latest announcement to increase fuel surcharges on 11/2/15 brought it more in line with what UPS charges today, the new UPS fuel pricing will again be higher than FedEx.

With these latest increases, UPS “Daily Rates” now MATCH FedEx to the penny on the following services:

•             UPS Next Day Air (matches FedEx Priority Overnight)

•             UPS Next Day Air Saver (matches FedEx Standard Overnight)

•             UPS 2nd Day Air A.M. (matches FedEx 2Day A.M.)

•             UPS  2nd Day Air (matches FedEx 2Day)

•             UPS Ground Commercial (matches FedEx Ground)

•             UPS Ground Residential (matches FedEx Home Delivery)

The following rates do NOT match:

•             UPS Next Day Air Early A.M. (does not match FedEx First Overnight, but are very close)

•             UPS 3 Day Select (does not match FedEx Express Saver; UPS rates are lower on average)

One other finding:  UPS will abandon its “Standard” published rates with the 2016 GRI. The UPS Standard rates matched FedEx pricing.  We’re guessing UPS feels it no longer needs Standard pricing to match FedEx since the 2016 “Daily” rates will so closely resemble those of FedEx.

While last year’s dimension-based pricing and other FedEx and UPS revenue management actions led many pundits to call it the “mother of all rate increases”, the aggregate impact of the announced 2016 GRI, fuel surcharges and special handling rate hikes is proving to be no less potent. Forewarned is forearmed. As always, good luck!

Rob Martinez is President and CEO of Shipware LLC.

Partner Content

The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.
Strategies for Maximizing Mobile Point-of-Sale Technology - NetSuite
Learn the top five innovative ways to utilize your mobile POS technology to drive customer engagement, increase sales and elevate your brand.