UPS Announces 2016 General Rate Increase
Effective Dec. 28, 2015, UPS Ground rates and accessorial charges will increase by an average net 4.9 percent. UPS Air and International services and accessorials, including UPS Air Freight rates within and between the U.S., Canada and Puerto Rico, will increase an average net 5.2 percent. UPS Freight rates will increase an average net of 4.9 percent, effective Oct. 26, 2015.
Effective Dec. 28, 2015, the Standard List rates will be combined with the Daily rates and will be published under the name Daily rates. Customers with Standard List rates should reference the combined Daily rates.
Effective Nov. 2, 2015, the surcharge will increase for Over Maximum Packages and the tables for Ground, Air and International fuel surcharges will be updated. Effective Jan. 4, 2016, there will be a charge for UPS’s third-party billing service.
The index for determining UPS’s U.S. Ground Fuel Surcharge and its Air and International Fuel Surcharge will change effective Nov. 2, 2015. For details, go to ups.com/fuelsurcharge.
For additional information and to review the new 2015 and 2016 rates, visit www.ups.com/rates. Customers can download the full 2016 UPS Rate and Service Guide beginning Dec. 28, 2015.
Shipware Analysis of UPS Announcement
UPS mostly followed the FedEx rate increase. Air & International is going up 5.2 percent, slightly higher than FedEx’s 4.9 percent average, but that was expected for two reasons: one, the UPS Daily Rates in 2015 were less than the FedEx published rates and, two, it follows a historical trend in that UPS has increased air rates slightly above FedEx in each of the past several general rate increases (GRIs).
Ground pricing seems to match FedEx exactly, as do many accessorial increases, including an increase of $52.50 to the “Over Maximum Limits” fee (the new rate will be $110.00).
It’s also important to note that UPS will implement its 2016 pricing on Dec. 28, 2015, a full week ahead of FedEx. Finally, UPS Freight (LTL) pricing is also increasing an average of 4.9 percent effective Oct. 26, 2015. (To date, FedEx has NOT announced increases for FedEx Freight.)
What’s surprising is that UPS is again increasing its fuel surcharge, effective Nov. 2, 2015. Where FedEx’s latest announcement to increase fuel surcharges on Nov. 2, 2015 brought it more in line with what UPS charges today, the new UPS fuel pricing will again be higher than FedEx.
With these latest increases, UPS's “Daily Rates” now match FedEx to the penny on the following services:
- UPS Next-Day Air (matches FedEx Priority Overnight);
- UPS Next-Day Air Saver (matches FedEx Standard Overnight);
- UPS 2nd Day Air A.M. (matches FedEx 2Day A.M.);
- UPS 2nd Day Air (matches FedEx 2Day);
- UPS Ground Commercial (matches FedEx Ground); and
- UPS Ground Residential (matches FedEx Home Delivery).
The following rates do NOT match:
- UPS Next-Day Air Early A.M. (does not match FedEx First Overnight, but is very close); and
- UPS 3-Day Select (does not match FedEx Express Saver; UPS rates are lower on average).
One other finding: UPS will abandon its “Standard” published rates with the 2016 GRI. The UPS Standard rates matched FedEx pricing. We’re guessing UPS feels it no longer needs Standard pricing to match FedEx since the 2016 “Daily” rates will so closely resemble those of FedEx.
While last year’s dimension-based pricing and other FedEx and UPS revenue management actions led many pundits to call it the “mother of all rate increases,” the aggregate impact of the announced 2016 GRI, fuel surcharges and special handling rate hikes is proving to be no less potent. Forewarned is forearmed. As always, good luck!
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.