UPS has announced their annual general rate increase (GRI) of 5.9% effective December 26, 2021. This mirrors the FedEx GRI announcement from September 20th and is 1% higher than previous years.
While carriers have announced an increase of 5.9%, total costs will likely rise more than 5.9%. This is largely because the 1-5lb rates are taking far higher discounts of ~ 12%, depending on the service. The UPS 3 Day Select service at this same weight break is going up over 20%. Also contributing to the greater than announced increase are the egregious increases in accessorial charges which are discussed below.
We encourage shippers to review the exact changes and see how these changes impact their shipment profile and spend. Better yet, ask the experts at ParcelLogix how these increases will impact your bottom line.
In addition to the base rate increases, it’s important for shippers to pay close attention to the increase in the accessorials. Many accessorials have increased over 30% in the last 4 years; several of which will increase by greater than 10% from 2021 to 2022. Examples of some of these increases beginning in 2022 are: UPS’ Additional Handling, Weight (12.36%), UPS’ Large Package, Commercial (13.65%), FedEx’s Delivery Area Surcharge, Economy (50%), FedEx’s Delivery Area Surcharge US Express Residential (10.64%). So, as you can see, the 5.9% is a fallacy.
Some additional observations about the increases.
· UPS recently announced a 1% increase to their fuel surcharge which impacts the base rates and several accessorial charges. This is the second fuel surcharge increase in the last three (3) months amounting to a 1.75% in total.
· As often happens, new surcharges are being introduced as well. Examples are UPS US48 Remote Area Surcharge (RAS) fee as well as the $1.00 charge FedEx is now adding to all deliveries on their new FedEx Economy service. What this means is that unless shippers negotiate these new surcharges with their carriers prior to the charges being instituted, they will be paying these surcharges absent any discount.
UPS and FedEx are focused on increasing profits and have a reluctance to negotiate, but ParcelLogix can help. We know how to negotiate deep discounts for rates and surcharges, and we’ve been able to save shippers between 15-25% in 2021.
Reach out below to get started. We look forward to hearing from you.
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