UPS Rate Increase to Take Effect Dec. 24

It comes as no surprise that UPS is raising its rates by an average of 4.9% for the next year. What does come as a surprise, however, is when the rate increases take effect.

Instead of taking effect Jan. 1, UPS will charge its new rates a full week earlier — on Dec. 24, 2017. Additional price increases to select surcharges will also be applied effective July 8, 2018.

New rates affect UPS Ground, UPS Air, and International services, along with UPS Air Freight between the US, Canada, and Puerto Rico. The 4.9% price hike on the carrier’s base rates is in line with increases in recent years. FedEx has also increased its rates by 4.9% for 2018.

Surcharges Rise at Faster Pace

As we know, a 4.9% price hike to base rates doesn’t mean a 4.9% increase in your shipping spend. How much your specific prices go up for 2018 largely depends on surcharges. And as we’ve seen, FedEx and UPS have become increasingly inventive with their accessorial fees.

Most surcharges are increasing at a rate far beyond the publicized 4.9% in the new year. Out of the common surcharges detailed in the table below, the average increase is a whopping 31.32%. Indeed, this figure is high because the Over Maximum Limits surcharge is rising by a whopping 233% (yes, you read that correctly).

Taking that one dramatic increase out of the equation, the price hike for surcharges is still an average of 15.81% — more than three times the figure that gets the headlines.

Effective July 8, UPS is adding two additional surcharges:

• Large Package Surcharge for US domestic packages delivered to a residential address is rising again. The price rises to $80 effective Dec. 24, and again to $90 on July 8.
• Additional handling surcharge for any US Domestic package that weighs more than 70 pounds is increasing to $19 per package.

Common UPS Surcharges in 2018

Dimensional Divisor Drops for Small Parcels

As dimensional divisors have been steadily dropping on most packages, UPS had kept a better rate in place for the smallest packages. Parcels measuring less than one cubic foot had been subject to a dimensional divisor of 166, a more favorable rate than the 139 industry average.

Having a dimensional divisor of 166 gave UPS an advantage over its competitor for businesses that ship many smaller packages. However, that comes to an end on Dec. 24. All parcels shipped with UPS are now subject to the 139 dimensional divisor.

Peak Season Surcharges for 2018

After introducing a peak season surcharge for the first time in 2017, the carrier announced the added fees will also apply in 2018 — and at a slightly higher rate. Per-package fees are increasing by about two or three cents, depending on service levels.

Rival FedEx has not included peak surcharge plans for 2018 in its yearly rate increase announcement.

An additional increase for large packages and those requiring additional handling during the holiday season remains in effect for 2018 as well. In addition, the carrier is adding a new peak surcharge fee for additional handling in 2018. All increases to accessorial charges are effective from Nov. 18 – Dec. 22, 2018.

Here’s a look at the changes to peak season surcharges added to large packages:

• Large Package surcharge increases 9.16% to $26.20
• Over Maximum Limits surcharge decreases 33.79% from 2017 rate to $165
• New additional handling surcharge of $3.15

How to Save on Shipping Costs

Prices may be rising, but there are still ways you can mitigate the financial impact to your business.

First, understand your data. Understanding in detail how much you ship and where you ship it to is crucial for negotiating a better rate. After all, you can’t negotiate a better rate if you don’t understand what you’re asking for.

Second, audit your invoices. Incorrectly applied surcharges happen more often than you’d expect. Monitoring your statements can help flag these errors so you can recover the funds.

Third, enlist a trusted partner. Valuable industry and regional benchmarks will help you compare carriers and understand the rates your competition is paying, giving you a baseline for negotiations. Carriers don’t make it easy to find this information, but a trusted partner like Reveel has data that can shed light on whether you’re getting the best possible rate.

Just because shipping rates are increasing doesn’t mean there aren’t opportunities to save. Our dedicated team of experts can help you identify opportunities to save in 2018 and beyond. Learn more about how we’ve helped businesses save up to 20% on their shipping costs with no risk or up-front costs.