UPS announced their 2020 rate increase on November 18th. The rate increase will go into effect on December 29th. As previously noted of UPS rate increases, the announced rate increase of an average net 4.9% can mean different things to you as a shipper based on your shipment profile.
As in every general rate increase announcement, the year over year increase is introduced as an average net increase as a percentage. Based on your shipping profile, however, this increase can mean more to you based on your specific air versus ground shipping profile. The year over year changes are also notable based on zone distance; a package traveling as a 3Day will see a 6.9% increase on average, for zones 5 and 6, while increasing an average of 7.9% for zones 7 and 8 (for shipments under 100 lbs). It is important to note, however, that the 3 Day service saw slower increases in previous years; the 3 Day UPS service is still an economical option and is still, on average, less expensive than some other competitive offerings.
Surcharges are increasing at a faster rate than transportation services. As a rule, many surcharges tend to increase at a rate faster than the rate of transportation. Many factors influence these changes, such as the costs of delivery and new technologies. Much like their competitors, UPS is increasing the costs for additional handling based on packaging, weight, and dimensions. Lastly, on the note of additional handling surcharges the weight threshold for applying an Additional Handling surcharge will be lowered from 70 pounds to 50 pounds (actual weight) for UPS Ground and UPS Air services.
Delivery Area and Extended Delivery Area Surcharges:
The Delivery Area Surcharge (DAS) and Extended Delivery Area Surcharge are charges assessed by the carrier to deliver to a specific set of addresses/zip codes. Commercial air and ground extended delivery area surcharges are seeing a significant increase, from $2.80 and $2.95 in 2019 for Ground and Air Delivery Area Surcharges to $3.45 and $3.60, respectively, for 2020.
New Fees for 2020:
- Rebill Fee: $17.00
- Prohibited Item Fee: $150
- Customs Clearance (Entry 86) Processing Fee: $10.00
These three surcharges are new for 2020. The rebill fee will apply when a package has the billing account changed, while the Prohibited Item fee will apply to shipments that have contents prohibited in the UPS Service Guide. Lastly, the customs clearance (Entry 86) processing fee will apply to shipments where a single customs entry is desired versus a consolidated clearance.
What Does This Mean For You As a Merchant?
As always, it is critically important to evaluate your own shipping habits to ensure that you are using the right services for you to reach your customers. An emphasis on the delivery objective itself and your buyer’s needs for shipment delivery and visibility will help to ensure you are using the right carrier services to satisfy the right needs. Accurately measuring your packages and reducing unnecessary space has become a critical factor in shipping cost management. Lastly, communication with your carrier is more important than ever to discuss your customer’s delivery needs and match them with the right carrier service offering.