UPS Matches FedEx With 6.9% GRI for 2023

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Days before its third quarter earnings report, UPS matched rival FedEx by announcing a general rate increase of 6.9% for 2023, an unprecedented figure for both major carriers set as a benchmark for pricing shipper contract rates.

FedEx took heat from analysts in announcing its rate increase last month, as it reported painful quarterly financials, with one questioning the rationale given current macroeconomic conditions and with volumes dropping.

Costs are of course rising across the board, including labor, supply chain and fuel expenses; surcharges more than cover the latter of those increases for carriers.

The new UPS rate schedule, which goes into effect Dec. 27, will see an average increase of 6.9% across Ground, Air and International services, the company said. Also on that date, UPS Air Freight within, between and among the U.S., Canada and Puerto Rico will increase an average of 6.2%.

Rates for the basic UPS Ground service will range from $10.10 for a 1 lb., zone 2 package, up to $562.03 for a 150 lb., zone 46 package. The average price per pound ranges from 69 cents in zone 2 up to $3.78 in zone 46.

UPS Next-Day Air rates begin at $37.44 for a 1 lb., zone 2 package, up to $1,750.83 for a 150 lb., zone 124 item. The average price per pound runs from $2.68 in zone 2 up to $11.67 in zone 124.

The carrier also announced some other changes for 2023, including canceling the variance of scheduled pickup options based on weekly billing total; increasing the late payment fee from 6% to 8%; dubbing peak/demand surcharges as just demand surcharges; and changes to the zone assignment of some ZIP codes.

Nate Skiver, founder of parcel consultancy LPF Spend Management, said neither FedEx or UPS would benefit from undercutting the other on published pricing. He added both selectively compete on price on a customer-by-customer basis, “and UPS makes it sound like they’ve recently been doing so successfully.”

“UPS takes the position that they don’t need to separately justify a higher GRI,” Skiver said. “Their service, and the value it provides, is enough justification. This, according to UPS, also allows them to win share from FedEx without having to compete on price.”