UPS will impose a series of new surcharges on shippers beginning in early June.
On June 4, UPS will raise rates on oversized shipments. Both the Over Maximum Limits and Oversize Pallet Handling Surcharge will increase from $500 to $650—a 40 percent increase on an already hefty fee.
On the same day, UPS will begin imposing a Shipping Charge Correction Audit fee. When UPS calculates different dimensions for a package than the shipper does and those disparities result in shipping charge corrections, UPS will now assess shippers. If the value of corrections in an invoice week is greater than $5, UPS will charge either $1 per package or 6 percent of the total amount of corrections, whichever is greater.
And a week later on June 11, UPS will hike its ground fuel surcharge by 0.5 percent for all shipments.
Why is UPS changing these shipping rates now? It’s because they want to change shipper behavior.
UPS Wants to Control What’s Being Shipped Through Its Network
As the growth of e-commerce eclipses brick-and-mortar retail in more sectors of the American economy, retailers are offering more products online. Customers can now order appliances, mattresses, furniture and other heavy and bulky products via Amazon or sellers’ websites.
But residential delivery networks were not designed to handle these huge parcels, shippers say. Heavy and bulky parcels slow down work at parcel sorting facilities and put strain on trucks and drivers, increasing fuel costs and slowing delivery times. The special service handling these packages require drives up labor costs, too.
This is “not a revenue-generating charge,” UPS spokesperson Glenn Zaccara told Reuters in May. “It’s something we have increased regularly over time to encourage customers to ship through the UPS Freight network for these over max items.”
UPS and FedEx have aimed additional fees at large parcels moving through their small-package infrastructure for several years now. This isn’t even the first time UPS has raised oversize package fees this year.
When it announced general rate increases last fall, UPS announced two rate increases for July 8, 2018: hiking additional handling fees for packages over 70 pounds from $12 to $19, and boosting the surcharge for large packages delivered to residential addresses from $80 to $90.
“Overmax” surcharges have existed since 2000, but have steadily increased and expanded to include a greater number of packages. These are the parcels that will now carry a $650 surcharge.
Currently, “Overmax” packages weigh more than 150 pounds or are larger than 108 inches in length or 165 inches in length and girth combined.
Again, UPS’s goal is to keep this kind of merchandise from clogging up its small-parcel network. The company said in the rate announcement that it wants shippers to move large, heavy items through the company’s less-than-truckload (LTL) network instead. This is part of its freight services. The higher these surcharges rise, the more likely shippers are to actually listen.
UPS Wants to Enforce Existing Rules and Limit Costs
Another key change in UPS’s new surcharge announcement: shippers will now have to pay UPS for any audit that results in a change in package dimensions.
For example, say a shipper claims a parcel is 106 inches long. If UPS decides to audit that shipment and it believes the package is in fact 108 inches long, it will impose the overmax surcharge described above. On top of that, UPS can charge $1 or 6 percent of the amount of the correction. In this case, it would be $650.
If shippers chose to dispute UPS’s findings, they can be charged for the cost of the audit as well.
However, there are many shippers who don’t state their packages’ dimensions before shipping them. These shippers may routinely begin to see $1 surcharges on each of those packages. And with audit fees, shippers have almost no incentive to fight these findings.
How Shippers Can Prepare
Now more than ever, shippers need to ensure they know and conform to UPS’s dimensional requirements to avoid oversize package surcharges, and new shipping change fees.
To start, shippers should look into their own warehouses. How do their products fit into UPS’s dimensional rules? Are there any products on the cusp of UPS’s rules that need to be closely monitored? Is there any packaging that needs to be redesigned to ensure compliance?
Second, now that UPS is charging for charge corrections, shippers need to make sure their bills and invoices are accurate and precise.
This is an intensive and time-consuming process for any company. Instead, choose to work with trusted partners like Reveel. Our consultants can review UPS’s invoices to catch errors and look for savings opportunities. They can help shippers understand how much all their carrier’s surcharges — not just those for oversize packages — impact their shipping costs And they can also help shippers conform to UPS’s requirements as efficiently as possible.
Start with a free invoice audit to see how Reveel could help your business save as much as 20 percent on shipping.