2018 has been an interesting year so far, and it’s only half way over. We’ve seen the ELD Mandate go into full effect, capacity issues, the price of oil rising, the economy booming, headlines about trade wars and UPS implementing aspects of their general rate increases mid-way through the year.
On July 9, logic changes went into effect for large packages in the UPS parcel network, making it more expensive to ship those heavy, bulkier items through UPS. Specifically, the large package surcharge for a residential delivery is increasing to $90 and anything weighing over 70 lbs. will see an extra $19 handling fee tagged on. In June, the surcharges for Over Maximum Limits and Oversize Pallet Handling increased by $150, a new shipping charge correction audit fee was added and the Ground Fuel Surcharge increased by 0.5% across all thresholds. Depending on what and how you ship, you could be seeing as much as a 16% increase in your shipping spend.
Expect this to be the new norm. Because consumer demand is changing and competition is increasing, UPS is making adjustments to their supply chain and investing in their infrastructure, neither of which come cheap. In previous years we’ve seen major GRI’s take place at the end of the year, making it fairly easy to predict the impact on parcel shippers. But this year we’ve seen multiple changes throughout the year, which makes budgeting for your parcel spend a little more complicated. We’re predicting that other carriers will follow this trend, and make changes throughout the year as their own supply chain analyses identify areas for revenue increases or operational inefficiencies.
Both UPS and FedEx have made it clear that they aren’t interested in shipping large, heavy packages. In May, we wrote about how the upswing in e-commerce, particularly for items like furniture, mattresses and exercise equipment, and potential changes in the last-mile delivery portion of parcel carriers’ supply chains.
If you’re not currently utilizing a 3PL, now is the perfect time to find a partner who has the experience to navigate today’s shipping environment. Rate increases are now happening throughout the year, instead of the historical once-a-year increase. It’s important to be able to predict future changes and know the impact they will have on your bottom line. According to our Parcel Expert’s analysis, the average increase on parcel spend could be anywhere between 2% and 10%. There are tangible steps you can take to mitigate these increases, and AFS parcel experts can ensure your business can cope with any and all changes. Give us a call today at 877-242-3383 or email us at [email protected].
For a full list of current UPS rates, click here.