UPS Announces 2020 General Rate Increases with Added Accessorial Charges

On November 18th, 2019 without much publicity, UPS announced their anticipated rate increases that will be effective December 29th, 2019.  UPS states “the published rates for our services will increase. This supports ongoing expansion and capability enhancements as we strive to maintain the high service levels you expect from UPS.”

UPS Peak Surcharges 2019

While analyzing the changes set forth by UPS we have garnished that not only with the rates increase, but virtually all accessorial charges with increase with the addition of other accessorial charges being implemented and the Delivery Area and Extended Area Surcharge Zip Code list will change.

UPS states on their website that tThe following changes will become effective December 29, 2019: 

• The rates for UPS^® Ground, UPS Air and International services will increase an average net 4.9%. 
• A Rebill fee will be assessed for each request to change the billing account for a shipment ($17 Fee). 
• A Prohibited Item fee will apply to packages containing prohibited articles or restricted articles not in compliance with all UPS policies and procedures and applicable laws and regulations if found in the UPS system ($150 Fee). 
• Value-added services and other charges will apply to undeliverable packages returned to the shipper. 
• UPS reserves the right to assess a late payment fee in an amount set forth in the UPS Tariff/Terms and Conditions of Service if an invoice is not paid in full by the invoice due date. 
• The weight threshold for applying an Additional Handling surcharge will be lowered from 70 pounds to 50 pounds actual weight for UPS Ground and UPS Air services.
• The list of ZIP codes to which Delivery Area Surcharges and Extended Area Surcharges apply will change. See updated zip code listings below (under 2020 Preview Rates) for more information.
• A processing fee will apply to each request to file a single entry under Entry Type 86 for a shipment that normally qualifies for U.S. customs clearance under a consolidated manifest ($10 Fee).
• UPS is removing the UPS’ Access Point network delivery charge in 2020 ($1.50 ea.).
• The rates for certain value-added services and other charges will increase.

A few months ago, FedEx announced rates and surcharge increases effective January 6th, 2020 along with there intended 2019 Peak Season Surcharges.  In evaluating both FedEx and UPS we have found that they mostly follow each other in comparable 2020 rate and accessorial costs whereas in 2019 there were significant differences.

The highest increases are for UPS 2 and 3 Day Express shipments to longer zones and for Large Package (Oversized) and Over Maximum, noting that Additional Handling will now apply on packages over 50 pounds versus 70 pounds with a charge of $24.

Service by Zone	2	3	4	5	6	7	8
Ground	5.1%	5.0%	5.2%	5.2%	5.0%	5.2%	5.0%
Next Day	3.8%	3.8%	4.9%	4.9%	4.9%	6.9%	6.9%
Next Day Saver	3.9%	3.9%	4.9%	4.9%	4.9%	6.9%	6.9%
2 Day	4.9%	4.9%	4.9%	5.9%	5.9%	6.9%	6.9%
2 Day AM	3.9%	3.9%	3.9%	4.9%	4.9%	5.9%	5.9%
3 Day	3.9%	3.9%	3.9%	6.9%	6.9%	7.9%	7.9%

Table 1. Overview of UPS Rate Increases by Service Level and Zone (under 100 lbs)

As you can see UPS is between 5.0% and 5.2% for Ground across zones, but when you look at Next Day, 2 Day, and 3 Day it ranges from 3.9% to 7.9%.  This means a significant increase in costs for air shippers to longer zones trying to keep up with consumers consistently expecting shorter transit times.

While FedEx and UPS Rates will predominately be similar, 3 Day UPS rates compared to FedEx are roughly 17% cheaper even with these increases.  FedEx SmartPost in the 1-9 pound range is still about 3% cheaper than UPS SurePost.

FedEx and UPS increase for Additional Handling weight (4.3%) and dimension (5.3%) and $24 over 50 pounds, Over Maximum will increase to $875, Large Package Surcharge will be $100 for Commercial and $120 for Residential, while 

Both UPS and FedEx have added 2,000 plus Zip Codes to the DAS (Delivery Area Surcharge) and EAS (Extended Area Surcharge) network along with changing some of the DAS Zip Codes to EAS.  The largest increase coming in at 23% for EAS commercial deliveries now at $3.45 per package.

Bottom Line for any Carrier General Rate Increase is that all shippers are not alike. Differences in shipping characteristics, contracted rates and incentives, as well as package profile differ greatly.  It is imperative to evaluate how these increases will affect your shipping costs for 2020 and make any possible changes now through negotiations and packaging as well as carrier selection and service level to minimize your expenses.  

While the UPS GRI Increase is announced as an average of 4.9%, you can see that this rarely matches a shippers specific profile.  Getting a detailed analysis outline from your historical shipping data will put you in a position to reduce your overall transportation costs for 2020.

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