Subscribe to our free, weekly email newsletter!


UPS rolls out 2011 rate hikes

By Jeff Berman, Group News Editor
November 02, 2010

UPS announced that new rates will kick in, effective January 3, 2011.

Company officials said that 2011 rates will include a net increase of 4.9 percent for UPS ground packages and a net increase of 4.9 percent on all air express and U.S. origin international shipments.

And UPS Ground shipments rates, said company officials, are based on a 5.9 percent increase in the base rate, minus a 1 percent reduction to the index-based ground fuel surcharge, while the rate increase for air express and international shipments is based on a 6.9 percent base rate increase, minus a 2 percent reduction to the index-based air and international fuel surcharge.

On October 1, UPS Freight, the company’s less-than-truckload subsidiary rolled out a general rate increase covering non-contractual LTL shipments in the U.S., Canada, and Mexico of 5.9 percent, which took effect on October 18.

UPS also announced that beginning on January 3, 2011, the divisor used to calculate dimensional weight will change to the following:

  • U.S. Domestic UPS Air Services will change from 194 to 166;
  • U.S. Domestic UPS Ground Services will change from 194 to 166 (for packages 3 cubic feet or larger)
  • export services from the U.S. for all services will change from 166 to 139;
  • UPS Standard to Canada will change from 166 to 139 (for packages 3 cubic feet or larger in size); and
  • Import to the U.S. from Canada and Virgin Islands will change from 166 to 139.

UPS officials said that dimensional weight for international multiple packages will be based on the greater of the actual weight or dimensional weight of each shipment in the package.

“These [rate increases] are not a big surprise,” said Jerry Hempstead, president of Hempstead Consulting. “I would have been surprised if they had not implemented the 166 dimensional weight rule after FedEx announced it. This is a major hit to shippers…it is all margin improvement for both UPS and FedEx as well. They do no additional work, make no additional capacity investment but get a windfall of incremental revenue on the same shipments they handle today.”

Hempstead these dimensional weight changes are good for shareholders and bad for shippers. He added that he was surprised at how low UPS’s ground increase is, considering that with only two ground parcel national carriers, whatever rate hikes one company announces is matched by the other, with the differences occurring in the discounting.

To put the dimensional weight changes into perspective, Hempstead explained that an 18"x18"x24” box with a dimensional weight of 40 pounds and an 8.5 percent fuel surcharge and a 50 percent discount would pay a rate of $92.58. But in January when the rate increase kicks in, the dimensional weight will bump up to 47 pounds (assuming the fuel surcharge stays constant but adjusted down 2 percent because of the way FedEx structured its increase) and the rate will rise to $109.91.

“The increase you are paying over your current charge is actually 18.7 percent…a far cry from the 5.9 percent discussed in the press release,” said Hempstead.

For more UPS stories click here.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Transportation and logistics bellwether UPS began 2015 in solid fashion with first quarter revenue up 1.4 percent at $14.0 billion and operating profit up 11 percent at $1.7 billion. Earnings per share were up 14 percent at $1.12, which exceeded Wall Street expectations of $1.09, while revenue was shy of the Street’s $14.27 billion estimate.

Last week, the United States Department of Transportation took further steps to address various issues identified in recent train accidents involving crude oil and ethanol shipped by rail. The announcement was made by DOT with other DOT agencies, including the Federal Railroad Administration (FRA) and the Pipeline and Hazardous Materials Safety Administration (PHMSA).

Logistics Management Group News Editor Jeff Berman had an opportunity to interview Derek Leathers, President and Chief Operating Officer of Werner Enterprises, at this month's NASSTRAC Shippers Conference and Transportation Expo in Orlando. They discussed various aspects of the truckload market, including prices, fuel, and regulations.

During this webcast our presenters will apply the findings of the 23rd Annual Trends & Issues in Transportation and Logistics Study to the world of shipper-carrier decision making. They'll examine the primary aspects that will influence the future direction for shipper-carrier decision-making.

For February, the month for which most recent data is available, the SCI dropped to -1.0 from January’s 2.6, with FTR explaining that the short term positive impact from one-time adjustments for rapidly dropping diesel prices and the suspension of the 2013 motor carriers hours-of-service expires later this year.

Article Topics

News · UPS · FedEx · Hempstead Consulting · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA