Parcel Rate Increases for 2012
UPS has announced 6.9 percent air increases, partially offset by a 2 percent fuel surcharge reduction. It's also announced a 5.9 percent average ground increase, offset somewhat by a 1 percent fuel surcharge reduction. Net increases for both UPS air and ground delivery are 4.9 percent, effective Jan. 2, 2012.
FedEx announced average rate increases of 5.9 percent for express and international services, offset by a 2 percent reduction in fuel surcharges. FedEx ground and home delivery rates will increase an average 5.9 percent next year, offset by a 1 percent fuel surcharge reduction. Net increases for express and international shipping average 3.9 percent; the average net ground increase is 4.9 percent.
However, for most shippers the impact is much higher than the average increases announced, especially for shipments weighing up to 50 lbs.
For this key weight bracket, UPS customers on daily rates will realize the following increases:
- next day air: 7.5 percent to 8.5 percent;
- next day air saver: 8.0 percent;
- two-day air a.m.: 6.5 percent;
- two-day air: 7.5 percent to 8.0 percent;
- three-day air: 8.0 percent to 10.0 percent; and
- ground: 7.0 percent to 8.0 percent.
Here are the increases for FedEx in the same one-pound through 50-pound weight bracket:
- priority: 4.0 percent to 6.0 percent;
- standard overnight: 6.0 percent to 7.0 percent;
- two-day a.m.: 6.0 percent to 7.0 percent;
- two-day: 6.5 percent;
- express saver (three-day): 6.5 percent to 10.5 percent;
- ground and home delivery: 7.0 percent to 8.0 percent;
- international priority: 4.5 percent to 9.0 percent; and
- international economy: 5.5 percent to 7.5 percent.
Shippers should take note that the ground minimum shipment charge will increase from $5.17 to $5.49, a 6.2 percent increase.
Many accessorial charges are as much as 10 percent higher in 2012. Delivery-area surcharges, residential surcharges, declared value and many other fees are well above the average increases announced. See the below chart for a partial list of accessorial charge increases for 2012:
In addition, many shippers will begin to feel the effects of 2011's dimensional rule changes as one-year extensions of the old 194 dim divisor are reset to the new 166 dimensional divisor.
United States Postal Service
- Express and Priority Mail products are increasing 3.3 percent and 3.1 percent, respectively, effective Jan. 22, 2012.
- First Class parcel service will increase an average of 3.7 percent. This has been one of the bright spots for the Postal Service, with fiscal 2011 volume up 6.5 percent and revenue up 9.7 percent year-over-year.
- Parcel Select will increase by an average of 8.5 percent, with slightly lower increases for destination entry.
- Parcel Return service is slated to increase 4.6 percent.
The Postal Service has also introduced several new flat-rate products, including an Express Mail flat-rate box that ships up to 70 pounds anywhere in the U.S. for $39.95.
Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Rob has helped some of the world’s most recognizable brands reduce parcel shipping costs an average of 25 percent through contract negotiations, rate benchmarking, modal optimization, invoice audit and other savings vehicles. A cum laude graduate of UCLA, Rob has 20 years of transportation industry experience, including executive positions at DHL and Stamps.com, in addition to his work as an outside consultant since 2001.