You’d be forgiven if you thought this was an old headline or a repeat of a blog from the pandemic timeframe. Unfortunately, that’s not the case. Both UPS and FedEx have unexpectedly decided to increase the rates for certain zip codes beginning on April 8th for UPS and on April 15th for FedEx.
What You Need To Know About Carrier Rate Increases
Typically, these increases are made around peak season—when holiday shopping and associated shipping volumes are at their largest—or in the annual general rate increases (GRI) put in place by each carrier. They were also common during the e-commerce boom of the pandemic, which saw several years of heavy shipping volume that was difficult for the carriers to keep up with.
Carriers often complain that rural areas are burdensome and time-consuming for them to ship to, resulting in increased fees and rates for those zip codes. However, these increases are being applied to shipments made to heavily trafficked urban areas, likely to offset decreases in volume and recent financial setbacks.
However, because these Delivery Area Surcharges (DAS) have been implemented at the beginning of the second quarter instead of during an expected increase cycle, your budgeting for the quarter—and maybe even the year—could be thrown off.
Here is the information you need to know about the new FedEx and UPS rate increases:
- Delivery Area Surcharges are being added to new zip codes, a majority of these being busy, urban city areas like New York, Boston, San Francisco, Los Angeles and Chicago.
- These fees will be assessed beginning in early April 2024.
- The charges start at an extra $3.95 (UPS) or $5.85 (FedEx), but increase from there based on the typical shipping variables – air vs. ground, commercial vs. residential, size and weight, etc.
- Be sure to review the full list of impacted zip codes in the materials posted by FedEx and UPS. Our friends at SupplyChainDive also put together a handy chart of the impacted zip codes here.
The Impact On Your Shipping Profile
The first step is understanding what these expanded DAS charges do to your shipping profile and cost structure, and then you can act. Perhaps there need to be changes to the types of shipping utilized, or the types of packaging, or adjustments made to the shipping options offered to customers.
The other thing to remember is that just because you already have a contract with your carriers doesn’t mean they won’t re-negotiate with you, especially if these rate changes greatly impact your business’s bottom line.
Information and analysis is key to learning the impact and adjusting accordingly. If you need help deciphering these changes, reach out to the Reveel team. Our technology can give you the tools necessary to remain abreast of any similar changes, and make the needed adjustments, even those made in the middle of the calendar year.
