UPS Announces 2015 General Rate Increase
Effective Dec. 29, 2014, the published rates for UPS services will increase. UPS Ground, Air and International rates will increase an average net of 4.9 percent. UPS air freight rates within and between the U.S., Canada and Puerto Rico will increase an average net 4.9 percent. UPS freight tariffs for shipments rated on the current UPS Freight 560 (U.S. 48), 525 (to and from Canada) and 570/571 (to and from Mexico) will increase an average net 4.9 percent.
However, average increases can be misleading. For example, all UPS air products will realize an actual rate increase significantly higher than the overall 4.9 percent average announced. Shipware has prepared the table below to demonstrate the impact of the actual rate increase average for UPS air products.
Similarly, the actual rate increases for ground services are above or below the 4.9 percent average depending on shipment weight. Rates for lightweight packages will increase much more significantly than heavier packages. See the table below for more detail:
Approximately 75 percent of all UPS ground shipments weigh less than 30 pounds, and therefore, most shippers will realize rate hikes well above the announced average. In addition, the 2015 Ground Minimum Charge will be $6.61 (up 5.9 percent from $6.24).
Perhaps more impactful than the general rate increases is UPS's decision to rate all ground packages by dimensional weight next year. Currently, both parcel carriers only apply dimensional weight pricing to ground packages measuring three cubic feet (5,184 cubic inches) or greater.
Regarding the change to dimensional weight pricing for ground packages, UPS foresees benefits for shippers as well as the environment. The UPS website states, "as a result of the dimensional weight pricing method, more shippers will seek to optimize their packaging practices. These efforts will reduce excess packaging materials and overall package sizes, leading to related reductions in fuel use, vehicle emissions and transportation costs."
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.