On November 18th, 2016 UPS implemented their latest general rate increase. On January 2nd, 2017 FedEx issued their latest installment of their rate hikes. Since both of these companies basically control the market share of this $100,000,000,000 U.S. parcel space, these cost jumps are effecting just about every company who ships anything in this country.
However, figuring out exactly how these new inflated prices are hitting your bottom line is very tricky...and that is not by accident I might add. To simplify this for you, KDL broke down these new pricing adjustments into easy bite sized nuggets so you can get a good idea of how shipping costs are going to impact your bottom line in 2017.
The Impact of the New UPS and FedEx Rate Increases for 2017
Ground Rate Increases
• As expected the percent increase declined with higher weight packages over 90lbs
• The largest increases were for packages going to zones 6, 7 and 8
Next Day Air Increase• The highest increases overall were for zones 106
• The single largest increase was a zone 2 letter at 6.11%
• For NDA services the overall lowest increases were for Zones 102 and 103
• Next Day Air Saver Increases
• The highest increases overall were for zones 135
• The single largest increase was a zone 2 letter at 5.41%
2nd Day Air Increases
• The largest increases interestingly are in the zone 208 area as shippers continue to use ground zones to their advantage which resulted in this carrier pricing shift. The increases here were as high as almost 7% for LX thru 3 lbs. to zone 8.
3 Day Select Increases
• The highest average rate increases are in zones 302, 303 and 304
*The highest percentage rate increases overall are on 3-day air services
With dramatic Hundredweight (CWT) rate increases shippers need to be cognizant of the costs/lb. and possible LTL alternatives.
Shippers should be aware that UPS Hundredweight (CWT) and FedEx Ground Multi-weight (MWT) programs were developed to convert LTL minimum rated shipments into Parcel deliveries. Now that both UPS and FedEx have LTL Operations (UPS Freight and FedEx Freight) expect the carriers to trend towards premium pricing to handle multiple
piece shipments in their Parcel networks. Recent increases in CWT/MWT rates, average package weight minimums and accessorial charge increases related to traditional LTL shipments (e.g. Large Package Surcharges, HazMat fees, etc.) makes it essential to have alternative cost and service effective options at your disposal. With LTL carriers expanding
their service areas and service options; it is essential to consider these and hybrid alternatives.