As Reveel has seen in previous years, UPS has announced its general rate increase for 2020 with new rates that take effect December 29, 2019.
This year, UPS list rates will increase by an average of 4.9%. While this does not paint a complete picture of what impact individual shippers can expect, here are a few factors that you should consider while assessing the potential impact on your bottom line.
Increases by Service
While overall list rates will increase by an average of 4.9% for UPS Ground, UPS Air and International services, this will vary by service type, weight and zone. See the table below for additional details on the average rate increase by service and weight break.
| Weight break (lbs.) |
Ground | Next Day | Next Day Saver | 2 Day | 2 Day AM | 3 Day | SurePost |
|---|---|---|---|---|---|---|---|
| 1 – 5 | 4.2% | 5.2% | 5.2% | 5.8% | 4.8% | 5.9% | 1.7% |
| 6 – 10 | 5.1% | 5.2% | 5.2% | 5.8% | 4.8% | 5.9% | 3.3% |
| 11 – 20 | 5.1% | 5.2% | 5.2% | 5.8% | 4.8% | 5.9% | 5.1% |
| 21 – 150 | 4.9% | 5.2% | 5.2% | 5.8% | 4.8% | 5.9% | 4.9% |
| Zone 2, 1LB increase |
4.8% | 3.9% | 3.9% | 4.9% | 3.9% | 3.9% | 1.4% |
| Zone 2, 1LB rate for 2020 |
$8.23 | $30.62 | $28.39 | $19.30 | $20.68 | $11.67 | $8.64 |
Increases to Fees and Surcharges
In addition to the service increases, we also see accessorial fees and surcharges increasing as well. These include:
- Additional Handling Surcharge (AHS) Dimensions increase from $14.25 to $15 (5.3%)
- Over Max Limits Surcharge increase from $850 to $875 (2.9%)
- Large Package Surcharge (LPS) Commercial increase from $95 to $100 (5.3%)
A notable change for 2020 is that Additional Handling Surcharge (weight) will now apply to packages weighing as little as 50 pounds. Previous to the 2020 rate increase, the weight threshold for this surcharge being assessed was 70 pounds. This is in line with FedEx’s announcement that was made in September and all packages weighing 50 pounds or more will be assessed this $24 fee.
There is more bad news for shippers who ship to remote and semi-remote destinations as UPS has increased the number of zip codes that will trigger Delivery Area Surcharge (DAS) and DAS Extended Surcharge while also increasing the surcharge amount. The most notable detail is Commercial Ground shipments going to DAS Extended zip codes rise 23.2% from $2.80 to $3.45. Additionally, Commercial Air shipments heading to DAS Extended zip codes rise 22% from $2.95 to $3.60.
Finally, there are some new surcharges that will appear in the 2020 service guide:
- A Prohibited Item Fee of $150 applies to package contents prohibited by UPS’s Service Guide.
- A Rebill Fee of $17 applies In the event a package needs to be rebilled to a different account number.
- A Type 86 Processing Fee of $10 applies to each request to file a single entry for a shipment that normally qualifies for consolidated customs clearance.
How to Prepare for the 2020 UPS Rate Increase
All of this information can be overwhelming, and sometimes it is difficult to even know where to start when considering all of the variables that could be changing to your cost structure.
To understand exactly how UPS’s rate increase will affect you, you’ll need to start by looking at your shipping data from recent years. Examine your service, weight, and zone distributions, package sizes, and surcharge spend. Then plug in UPS’s 2020 list rates to see how your shipping spend will change year over year if you don’t make any changes. Knowing the impact to your current business will help you pinpoint what you can control and impact the most.
Finally, figure out what changes that you can make to reduce the impact of rate increases.
If all of this seems too daunting, then work with an expert consultant at Reveel to understand what changes that you could make, small or large, to work within these new parameters.
You don’t have to bear the full burden of these changes. If one change feels like it will disproportionately impact your business, then negotiate it. Despite what UPS has published, the new rates and new rules are not set in stone for everyone. Every line-item in your contract is negotiable.
Reveel can help you prepare for these negotiations by understanding what to target and how much to ask for. UPS may not be willing to modify their list rates, but if they shave a few dollars off of a few key surcharges or increase discount percentages in certain areas, then you can certainly mitigate, if not eliminate the effects of these changes for your business.
Reach out to Reveel today to see how we might be able to help re-rate your carrier data. Best of all, our contract negotiation preparation services are risk-free. We believe so strongly that we’ll help you pad your bottom line that we’ve built our business model around it.
