UPS rolls out 2011 rate hikes

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.

By ·

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, 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. Contact Jeff Berman

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!

Article Topics

FedEx · Hempstead Consulting · UPS · All Topics
Latest Whitepaper
Leveraging Florida Ports to Expand Two-Way Trade with Asia
Florida’s geography is convenient to global markets and serves as the perfect conduit for Asia-focused container trade. Florida Ports, seaport white papers, Benefits of using florida ports
Download Today!
From the April 2018 Logistics Management Magazine
As companies continue to search for the next generation of logistics management talent, the existing workforce is being asked to deliver more than ever before. While our survey respondents aren’t griping about the workload, they maintain that new challenges require more resources.
LM Viewpoint: 2018 Salary Survey, delivering more than ever
Smoother execution through S&OP
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Reshaping the Restaurant Supply Chain in the Digital Age
Get an inside look at how a leading restaurant group Bloomin’ Brands Inc (BBI), coordinates its complex supply chain to deliver an exceptional restaurant experience at the lowest cost to serve.
Register Today!
EDITORS' PICKS
34th Annual Salary Survey: Salary growth slows, tasks soar
As companies continue to search for the next generation of logistics management talent, the existing...
Evolution of E-commerce: The possibilities of tomorrow
We know e-commerce is reshaping logistics, but what are the technologies savvy managers can leverage...

State of Global Logistics: Delivering above and beyond
Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and...
2018 Rate Outlook: Economic Expansion, Pushing Rates Skyward
Trade and transport analysts see rates rising across all modes in accordance with continued...