UPS 4.9% General Rate Increase to Take Effect Dec. 26

UPS has announced its annual general rate increase (GRI) for 2017, an average bump of 4.9% that goes into effect on Dec. 26, just after the Christmas holiday as returns flood in as has been the case the past couple of years. FedEx has yet to announce its GRI hike, but the two major carriers generally move in lockstep on the rate hikes.

The GRI from UPS impacts all its domestic air and ground parcel services, as well as international shipping rates. UPS Freight for larger volume shipments will increase 4.9% as of Sept. 19. Other UPS rate changes will be made public on Nov. 18.

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“UPS continues to make investments in the speed, scope and coverage of our transportation network,” the company said in announcing the changes. “Rate increases will support ongoing expansion and capabilities enhancements, while UPS strives to maintain the high service levels customers expect.”

While the announced rates from both carriers are average annual increases in shipping charges, parcels in the under-5 lb. range – representing the vast majority of ecommerce shipments – tend to get hit with larger percentage hikes. Also large-volume shippers can generally negotiate some relief from the rate changes.

Parcel industry consultant Jerry Hempstead said the interesting part is UPS announcing its air and ground rates before FedEx. Historically, Hempstead noted, FedEx has announced its air express rate increase in September, usually in conjunction with its first quarter earnings call, then waited until UPS announced its ground rates before matching them.

“Well last year FedEx announced both air and ground in September and then UPS had to scramble to arrange its tables to match FedEx,” Hempstead said. “It looks like UPS is trying to telegraph to FedEx that it is the big gun in the fight and they will announce the industry standard.”

As for the rate increases coming in November, Hempstead said he would be surprised given the massive growth in ecommerce if UPS’s residential delivery surcharges within the U.S. don’t go up. The announcement only mentions residential surcharge increases for ground shipments to and from Canada and from Mexico.

Over the past decade, the price of shipping packages using ground services from FedEx and UPS has spiked 79.2%, according to transportation software provider Lojistic, while their air shipping rates have nearly doubled, rising 95.5% during that time.

Mike O’Brien is Senior Editor of Multichannel Merchant

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