UPS 2019 Rate Increase of 4.9% Given 3 Weeks Before Effective Date

Less than three weeks before the prices take effect the day after Christmas, UPS announced its 2019 rate schedule, including an overall rate increase of 4.9% for its ground, air and international services, leaving shippers scrambling to adapt at the busiest time of year.

Last year UPS announced its general rate increase (GRI) in October, and in September the year before that. FedEx announced its 4.9% GRI for 2019 in early November. While the new FedEx rate schedule takes effect Jan. 7, UPS’s hike happens as of Dec.26, meaning it will hit the first massive wave of Christmas returns.

“This year (UPS) announced it three weeks before the effective date and in the heat of the fourth quarter peak shipping,” said parcel consultant Jerry Hempstead. “Large shippers will have little time nor the IT resources to sift through the nuances of this year’s announced changes.”

A new charge being imposed by UPS is a $2 fee when shippers fail to provide “package-level detail” or an electronic manifest of all information about a package. The company is looking to recoup its costs for manually inputting information from a printed manifest, including errors when data is wrong or missing. Most large-volume shippers have electronic manifesting, but smaller ones often do not.

“To UPS the successful receipt and execution of valid shipment data before the package gets into the network is extremely important to its efficient movement,” Hempstead said. “This new fee is to hammer home how important this function is and will continue to be. Expect this fee to go up.”

“This is a consistent theme to UPS increases – it’s costing them more, so they want their customers to help pay for it,” said Rob Martinez of Shipware. He added while high-volume shipping contracts generally call for 30 days’ notice of pricing changes, most won’t push back but roll with the changes.

UPS is also increasing its third-party billing rate from 2.5% to 4.5% of the shipment price. This often comes into effect in drop shipping, when a manufacturer or brand ships an item sold on a company’s ecommerce site or marketplace. The seller shares its UPS third-party billing account with the shipper to take advantage of its discounted rate.

“Again, UPS is saying it’s costing them more than when they priced out your business based on a central facility and a certain density,” Martinez said. “Using third-party billing changes the cost equation for UPS. They’re saying, you can do it but we’ll charge you more for it.”

While 4.9% is the average increase across ground, air and international, there are many charges that exceed that total. For instance, UPS SurePost rates for packages under 1 lb. will go up 10.1% to $8.52, rising 9.9% to $8.416 for packages over 1 lb. SurePost is a hybrid service where packages are inducted into local U.S. Postal Service DDUs for final-mile delivery.

“100% of these deliveries are using the USPS, and there is really no alternative method or means,” Hempstead said. “Shippers could shop the business to SmartPost from FedEx or DHL eCommerce or Pitney Bowes, but all the zone skipping alternatives are faced with covering the rate increase from USPS.”

Other UPS increases include substantial hikes in surcharges for additional handling weight (from $12 in 2017 to $23 for 2019, up 91.7%), large package ($80 to $115, up 43.7%) and over-maximum limits ($500 to $850, up 70%). All had been increased in July.

“The larger packages will suffer the most pain, as we saw last year as well,” Hempstead said.

As many oversize ecommerce orders don’t qualify for less-than-truckload (LTL) shipments, Martinez said, shippers don’t have a lot of options. He added FedEx and UPS have both modified sortation centers to handle the explosion in oversized items.

“In fact, the carriers are building scale around these larger packages so operating costs should start coming down, while they will continue to enjoy significantly greater profit with each rate increase,” Martinez said.

You can find all the UPS 2019 rate information here.