Perhaps the most famous three words uttered in literature, "Et tu, Brute?" (Even you, Brutus?) This expression has come down in history to mean the ultimate betrayal by one's closest friend.
UPS reported July 22, 2008, a 6.7% revenue increase in the second quarter but an 18.3% decline in diluted earnings per share to $0.85 compared to $1.04 the prior year. Increasing fuel costs and a stagnant U.S. economy caused the earnings decline in both the U.S. Domestic and International Package segments.
A recent article pointed out that bowing to high fuel prices; UPS will change its policies on parcel service guarantees and no longer include the fuel surcharge in its refunds to customers.
The shift effective September 2 means UPS will only refund the basic charge and whatever other accessorial charges were included in the bill, including pickup and special service charges.
While nothing changes the ability of our customers to request a refund of shipping charges, we do still make the delivery. So since we still make the delivery, including fueling the truck to get it there, we are going to stop refunding the fuel surcharge fee. (Does shining shoes add to the cost?)
UPS Service Guarantee
UPS guarantees on-schedule delivery of packages shipped via UPS Air Services, UPS Hundredweight Service Air Services, UPS 3 Day Select and UPS Hundredweight Service UPS 3 Day Select, and UPS Ground and UPS Hundredweight Service Ground, where such services are available, to all 50 states and Puerto Rico.
UPS reserves the right to terminate a shipper’s access to and use of the UPS Systems for any reason, including if UPS in its sole judgment believes that (1) the system is being used for an illegal purpose or a purpose not authorized by UPS, or (2) UPS or a third party’s rights are being jeopardized, or (3) UPS or any third party is potentially exposed to liability or damage of any type, or (4) the shipper is violating the UPS Tariff/Terms and Conditions of Service or any other applicable agreement between UPS and the shipper.
Package Tracking/Tracing and Refund Request Charge
UPS reserves the right to assess a shipper an additional charge of $3 per request for each Package Tracking/Tracing and Refund Request initiated by or at the request of the shipper. This charge will not be assessed for the first 50 package tracking requests per calendar week, or for a quantity of package-tracking requests equal to or less than 20% of the shipper’s package volume for that week, whichever is greater. This charge will not be assessed for a quantity of package-tracing requests equal to or less than two percent of the shipper’s package volume for that week. UPS also reserves the right to assess the shipper a charge in the effective UPS Rates for Service Guarantee refund requests when the subject package was delivered in accordance with the applicable UPS Service Guarantee in the effective UPS Tariff/Terms and Conditions of Service.
Do you think UPS will enforce the above policies? What revenues would be generated? How many of your packages arrive late? Answer: Typically, if you use UPS, FedEx, or FedEx Ground, 3% to 8% of packages shipped arrive late. Depending on the type of service you use, that figure can climb as high as 30%.
The above from a web search to find a company that offers a system to track and trace service guarantees and collect the millions of dollars of potential refunds, even if it is a minute late. Fact is most time definite shipments should not have happen anyway*, or should be on the ground in zones 2 and 3 (up to 450 miles, ask a LTL carrier about their on-time service up to 450 miles). Ground service is usually not watched as much as the higher premium express services even though it usually has a higher volume levels.
So why not experiment with your own policy, no refund for any late shipment, just ask for a better discount, without the carriers service failure policy. The carrier will see what happens to their shipment volume when they underperform and the phones are all hectic with complaints. We have learned to understand market forces, we all buy gas.
This would be a great way to keep shippers and carriers looking for continuous improvement, just as the shippers are held to the fire to perform for their customers.
I suppose when you don’t live up to your tariff policy of a refund, fuel charges being part of the monies collected you could also say UPS is now like the airlines and will charge for seat selection now and anything else they can force the customer to except. It is a sad day for a one time UPS driver and manager to see the policy book that made UPS what it is today abused in such a manner.
I have often wondered what happen to the policy “we will grow by word of mouth”, not advertising, and yet UPS spent over $300,000,000 for advertising. It appears those cars and horses are expensive. Do you believe this old policy book no advertising strategy would put more money to the bottom line, instead of keeping the fuel surcharge? If you have an OR (operating ratio) of a 90, you would have to generate 10 times the $300,000,000, or $3,000,000,000 ($3 Billion) to make the $300 million profit.
The recent addition to the UPS tariff (8-04-2008) of increasing late charge fees from 5 to 6 percent is an understandable charge; not refunding fuel charges is not. (UPS Tariff effective 9-02-2008)
*The fuel surcharge for a five pound Zone 2 to Zone 2 shipment next day air is $10.14. A five pound ground shipment has a total charge including fuel of $8.34, peanuts anyone?
UPS TERMS AND CONDITIONS EFFECTIVE SEPTEMBER 02, 2008
In the event UPS fails to attempt delivery within the time published on the UPS website, or as provided when 1-800-PICK-UPS is called, UPS, at its option, will either credit or refund the transportation charges for each such package to the payer only, upon request. Transportation charges do not include other fees or charges that may be assessed by UPS, including but not limited to, fuel surcharges. This is the sole remedy available under the UPS Service Guarantee. The UPS Service Guarantee is subject to the following conditions and exclusions:
Hank Mullen of The Visibility Group has over 39 years of experience in the transportation industry, including an in depth understanding of freight classifications and STB (Surface Transportation Board) Regulations. Hank has substantial expertise within the LTL, TL and package industry. He is involved with strategic benchmarking, rate comparison analysis, invoice auditing and tariff and accessorial charge evaluations. Hank has followed closely carrier general rate increases and carrier rules tariff, and also classification bureau for the trucking industry. Hank can be reached at 678-880-8243 or at hmullen@thevisibilitygroup.com.
