UPS rolls out 2014 rates for Ground, Air and International, and Air Freight

UPS announced yesterday that it has rolled out an average rate increase of 4.9 percent for its Ground, Air, and International parcel products that will go into effect on December 30, 2013.

Company officials said these rates apply to within and between the U.S., Canada, and Puerto Rico, adding that updated rate and service information is now available on the company’s Web site, with customers able to download the 2014 USPS Rate and Service Guide on December 30, when the new rates go into effect.

This follows a September announcement by UPS’s biggest competitor, FedEx, whom announced 2014 rates in September. FedEx plans to increase shipping rates for FedEx Express by a cumulative average of 3.9 percent for U.S. domestic, U.S. export and U.S. import services that will take effect January 6, 2014. Rate changes for 2014 FedEx Ground and FedEx SmartPost pricing offerings are expected to be announced before the end of the year.

“As it has historically done, UPS Ground increases are higher at the lighter weights and less impacting at heavy weights,” said Rob Martinez, president & CEO, Shipware Systems Corp, a San Diego-based parcel consultancy. “The 2014 Ground Minimum Charge is $6.24, a 6.8 percent increase from 2013.”

For years, said Martinez, the UPS “Daily Rates” were better than FedEx’s list rates, but with the 2014 rate increase, the UPS Daily Rates are now a lot closer with FedEx, especially for 1-2 day service options.

“On the whole, UPS Daily rates are still less expensive for 3-Day Air than FedEx Express Saver, but it depends on weight and zone configurations,” explained Martinez. “In 2014, UPS ‘Standard Rates’ will match FedEx’s published rates. It is important to note that FedEx maintains a more favorable fuel surcharge threshold than UPS for both Express and Ground packages at current fuel prices.”

An analysis provide to LM by Dan Malech, AFMS Pricing Director and Doug Caldwell, AFMS VP International, noted that this marks the first time since 2010 that UPS is not offsetting the rate increase with a reduction to the fuel index.

But they said that the average increase for base rates does not tell the whole story. 
“For example, the ground zone 2, 1 lb. minimum has increased 6.8 percent (greater than last year, and the highest since 2011) and many lightweight ground cells are taking increases approaching 8 percent,” they wrote. “Additionally, the seldom used 71-150 lb. cells are only increasing 3.6 percent, which is driving the overall average increase down.  The Ground Residential Surcharge is increasing 3.5 percent, down from 9.8 percent last year; however, the increase to the service rates will still make this a very substantial increase.  The Ground Delivery Area Surcharges are up 3.0 percent-3.5 percent.”

The AFMS executives said that UPS announced that their rate increase for air and international services is also 4.9%, with no offset to the fuel surcharge index.  The base rates may average the announced increases, they said, and offered up a synopsis highlighting some particularly hard hit areas:
-higher zone express shippers could experience increases in the 6 percent-7 percent range; and
-surcharges for residential air deliveries are up 3.1 percent, down from 6.7 percent last year, while the delivery area surcharge is up 4.7 percent for commercial and 4.6 percent for residential, and in extended areas 4.3 percent