UPS Announces 6.9% Rate Hike
UPS has followed the lead of its chief competitor, FedEx, in announcing that rates for its Ground, Air and International services will increase by an average of 6.9 percent effective Dec. 27, according to the company’s website. Furthermore, UPS announced higher accessorial charges effective on the same date, including for residential deliveries, packages requiring additional handling, and deliveries to remote areas. FedEx announced a 6.9 percent average rate increase of its own in September. The two logistics giants typically mirror each other’s rate and surcharge hikes.
Total Retail's Take: As is often the case, UPS and FedEx have both announced the same percentage rate hike, with each increase going into effect shortly after the conclusion of the peak holiday shipping season. The carriers are saying the increased rates will help their businesses offset rising inflation. However, the rate increases exceed what analysts were forecasting for the 2023 general rate increases (GRI), with most speculating an increase somewhere around 6 percent, not closer to 7 percent.
While GRIs apply to noncontract shipments and are therefore somewhat symbolic because virtually all parcel deliveries move under contract, the level of contract rate increases, and the discounts negotiated off of those increases, are generally pegged to actions that parcel carriers take with their GRIs. Therefore, GRIs are a key barometer of the rates and discounts that shippers can expect to receive in their contracts, according to FreightWaves.
Joe Keenan is the executive editor of Total Retail. Joe has more than 10 years experience covering the retail industry, and enjoys profiling innovative companies and people in the space.