UPS announces 2013 rate increases

On Friday, UPS announced its new published non-contractual rates for 2013, which will take effect on December 31.

According to company officials, non-contractual 2013 rates will be comprised of a net increase of 4.5 percent for UPS Air and International Services and UPS ground packages are going up 4.9 percent.

UPS said that its increase for UPS Air and International Services is based on a 6.5 percent average increase in the base rate, minus a two percentage point reduction to the Air and International fuel surcharge table. This is down from a 6.9 percent base rate increase announced for 2012 a year ago at this time.

And the rate increase for UPS Ground services, said UPS, is based on a 5.9 percent average base rate increase, matching 2012, minus one percentage point reduction to the Ground fuel surcharge table.

UPS Next Day Air Freight and UPS 2nd Day Air Freight and UPS 3 Day Freight rates for
shipments within and between the U.S., Canada and Puerto Rico will increase by 4.9 percent, down one full percentage point from 2012’s announced rates.

In July, UPS Freight, the less-than-truckload subsidiary of UPS, announced a general rate increase (GRI) of 5.9 percent, effective July 16. UPS Freight officials said this GRI applies to minimum charge, LTL rates, and accessorial charges.

Robert W. Baird & Co. analyst Ben Hartford wrote in a research note that even though list price increases for UPS Air and U.S. origin international services are lower than 2012 increases and UPS Next Day and his firm recognizes that “a competitive market ultimately sets the rates and do not overemphasize the change in list price announcements in 2013 versus 2012 growth rates.”

Jerry Hempstead, president of Hemsptead Consulting, told LM that effective in 2013, UPS shippers will have relief from the company’s dimensional pricing rule, which will expire next year. Dimensional pricing is based on the greater of the actual weight or dimensional weight of each shipment in the package and is a major driver of revenue gains.

Hempstead added that most accessorial charges for UPS are increasing at a rate greater that the announced General Rate Increase.

In September, FedEx, UPS’s biggest competitor, rolled out its 2013 rate increases.
FedEx Express package and freight rates will head up 5.9 percent for for U.S., U.S. export and U.S. import services and will be partially offset by adjusting the fuel price at which the fuel surcharge begins, reducing the fuel surcharge by 2 percentage points.
2nd Day Air Freight rates are lower, too.