UPS® is delivering a present just in time for Christmas – a 4.9% rate increase. Beginning December 24, 2017, rates for UPS Ground®, UPS Air®, International services as well as UPS Air Freight® rates within and the between the US, Canada, and Puerto Rico will increase an average of 4.9%. UPS® also announced additional rate hikes to roll out July 8, 2018. It’s no surprise that shipping rates have continued to climb over the years, but what does 2018 have in store for UPS® shippers? Here’s what we know so far.
Small-item shippers beware
In the past, UPS® had the advantage over FedEx® when it came to the DIM weight divisor on packages measuring less than one cubic foot. Now, UPS® is mirroring FedEx by decreasing the DIM weight divisor from 166 to 139 and entirely eliminating their advantage.
Learn more about DIM weight: The rise of dimensional weight
If the majority of your shipments are smaller packages, it’s time to start crunching the numbers. The lower the dimensional divisor, the higher the surcharge. This DIM change coupled with the announced average rate increase of 4.9% can have serious financial implications for your business.
Think twice before shipping large items
It’s clear the rate increases are targeting those that ship excessively large, bulky items. As of July 8, 2018, UPS® will raise the additional handling cost for packages weighing over 70 pounds from $12 to $19 and raise the additional handling charge for large packages delivered to a residential address from $80 to $90. The Over Maximum Limits surcharge is rising from $150 per package to $500 per package. UPS is getting their message across about how they feel shipping those oversized items.
Learn more: 2018 UPS® rates
Don’t forget the sneaky surcharges and fees
Of course, every shipper will be impacted differently due to the increased surcharges, higher fees, and their individual carrier agreements. The resulting charges often exceed the publicized 4.9% rate increase on shipping. Let’s take a simple address correction charge for example. UPS® has implemented a $2.50 rate increase moving the cost from $13.40 to $15.90 and resulting in an 18.65% increase. That’s definitely nowhere near the 4.9% average. Here are a few extra changes that small parcel shippers should be aware of while planning for 2018.
- Address correction charges set to increase from $13.40 per correction to $15.90 per correction.
- Delivery area surcharges set to increase by $0.25 for residential shipments.
- Delivery area surcharges set to increase by $0.30 for commercial shipments.
- Residential surcharge to increase by $0.20 for ground.
It’s your move now
If UPS® is your carrier, now’s the time to adjust 2018 budget models and plan accordingly to make operational changes to offset the rate increases. Don’t hesitate to contact your carrier rep to understand how changes will impact your day-to-day business processes.
As added protection, get a second opinion. Contact a shipment auditing company like Share a Refund to ensure you are seeing the maximum amount of refunds returned to your business with the new rising rate prices and increased surcharges. Check in with our parcel contract optimization team and get a free assessment of the expected costs related to the new rates. Faced with increased shipping rates, it’s more important than ever to reduce costs in all possible areas. Shipping rates are rising, but that doesn’t mean there aren’t opportunities to lower costs.