UPS announced its 2019 rates today–as you probably expected, they went up.

  • Rates will increase an average of 4.9% for UPS®Ground, UPS Air and International Services
  • Fuel surcharges will now be added on top of specific accessorials including:
    • Additional Handling Fee
    • Over Maximum Limits
    • Signature Required
    • Adult Signature Required
  • A $2.00 per package processing fee will be applied when a PLD (Package Level Detail) is not provided to UPS prior to the delivery
  • Certain value-added services and other charges will increase

For the last several years, UPS and FedEx have steadily increased base rates at 4.9 percent per year. But that’s not the whole story. Shippers spend an average of 35 percent of their shipping budgets not on base rates, but on surcharges. These extra fees tend to rise in fits and starts, maybe staying steady for several years and then doubling overnight.

2019 UPS Package Accessorial Changes include:

  • Additional Handling Fee Accessorials
  • Address Correction
  • Area Surcharges
  • Collect on Delivery (C.O.D.)
  • Chargeback For Consignee Billing Shipments
  • Declared Value For Carriage
  • Delivery Confirmation
  • UPS Delivery Intercept®
  • Dry Ice
  • UPS Delivery Intercept®
  • Dangerous Goods (Hazardous Materials)
  • Large Package Surcharge
  • Missing/Invalid Account Number or Refusal Fee
  • Missing Package Level Detail (PLD) Fee
  • Over Maximum Limits and Oversize Pallet Handling Surcharge
  • Residential Surcharge
  • Scheduled Pickup
  • Third Party Billing Service

That’s why it’s critical for shippers to know exactly what they ship, where it goes and what surcharges they pay now—so they can figure out exactly how these rate increases will impact them.

Package rates effective December 26, 2018:

  • Daily Package Rates
  • Alaska and Hawaii Daily Package Rates
  • UPS Retail Package Rates
  • UPS Alaska and Hawaii Retail Package Rates
  • UPS Hundredweight Service Package Rates
  • Delivery Area Surcharge Zip Code Rates
  • Extended Area Surcharge Zip Code Rates
  • UPS SurePost® Rates

Effective December 26, 2018:

  • UPS Air Freight Rates
  • UPS Air Freight Accessorial Rates
  • U.S. Origin UPS Express Freight® Premium Direct Rates

Effective December 31, 2018:

  • Domestic Air Fuel Surcharges

UPS General Rate Increases 2019

Last year, UPS surprised shippers by imposing its general rate increase on Christmas Eve–a full week earlier than FedEx. But it shocked shippers with huge surcharge increases: UPS’s accessorial fees rose by an average of 31 percent.

Much of that was due to a 233 percent increase in the Over Maximum Limits surcharge, which shot up from $150 to $500 per package. But even excluding that figure, UPS surcharges rose by an average of 16 percent—more than three times the 5 percent shippers are accustomed to.

In 2019 you can expect the Over Maximum Limits surcharge to increase and additional $200 on top of the current price of $650.00, making a grand total of $850.00, a 30.7% increase.

 

Name

2017

2018

2019 Increase

% Increase

2019 Total

Large Package Surcharge

$70

$90

$20

22.22%

$110

Over Maximum Limits Surcharge

$150

$650

$200

30.76%

$850

Additional Handling Package Surcharge

$10.85

< 70 lbs: $12

< 70 lbs: + $2.25

18.75%

$14.25

> 70 lbs: $19

> 70 lbs: + $4.00

21.05%

$23

 

These rate increases should remind shippers that budgeting for a 5 percent GRI just doesn’t cut it. Depending on what you spend on surcharges, your company’s shipping spend may grow much faster.

UPS Seasonal Holiday Surcharges

For the last two years, UPS has charged small surcharges on every package it moves between Nov. 18 and Dec. 1—a period that includes Thanksgiving, Black Friday and Cyber Monday—and between Dec. 16 and Dec. 22.

In 2018, those rates range from $0.28 per package shipped by UPS Ground to $0.99 per package for UPS 2nd Day Air and 3 Day Select services.

Larger holiday surcharges on shipments such as large packages ($26.20 on top of an existing $90) and packages that require additional handling ($3.15 on top of $12 for most packages), last for the whole holiday season.

The company says it moved 700 million packages during the 2017 holiday season, which means these cents add up fast.

Changes to Dimensional Weight

UPS and FedEx have been dropping their dimensional divisors in tandem for the last few years. In its 2018 rates, UPS dropped all its dimensional divisors to 139.

Prior to last year, UPS had been comparatively generous with parcels measuring less than one cubic foot, offering them a dimensional divisor of 166. Based on the company’s 2018 and 2019 rates, we can assume that companies are done making exceptions for small parcels.

Dimensional divisors are important because they determine which parcels will be charged by dimensional weight— based on a package’s length, width, and height—rather than their actual weight. As dimensional divisors get smaller, more parcels are priced according to dimensional weight rather than actual weight. As you might expect, dimensional weight rates are higher than actual weight rates.

That means that even if parcels are very lightweight but large, they can be as or more expensive as heavy but compact packages.

Both UPS and FedEx did not announce changes to Dimensional Weight for 2019.

How to Save on Shipping Despite Rate Increases

Before you can start strategizing around the 2019 GRI, you need to understand exactly how it will affect your company’s shipping spend. Which of these surcharges do you pay frequently, and which hardly ever appear on your invoices? How often do you use Ground, 2nd Day Air and Next Day Air services? If you don’t know, start tracking your packages and gathering data as soon as possible. Enlist a trusted partner like Reveel, if you need help getting started.

Armed with that information, you can quickly get a picture of how much you’ll spend on shipping in 2019 based on your current needs and current contract. Just plug in the new rates and see how your spending changes.

Only then can you start figuring out how to reduce the impact of rate increases.

Resource: Estimate Your Shipping Costs: What Goes Into The Rates You Pay With FedEx and UPS

That might mean auditing your invoices to make sure your carrier is accurately charging fees and that you’re collecting refunds for late and missed deliveries. It might mean targeting specific surcharges in your next contract negotiation. It might mean in-house modifications like changes to your packaging, so you avoid additional handling or large package fees. Or it might be a combination of all three.

Whatever you need, Reveel can help. Reach out today for a consultation with one of our experts.

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