|UPS and FedEx 2014 Rate Increases: Things to Consider |
By Jeff Lindmark
|UPS announced a rate increase for 2014 effective December 30th, 2013. The average increase is 4.9%. |
FedEx announced a rate increase for 2014 effective January 6th, 2014. The average increase is 3.9%.
The actual impact these rate increases will have for most companies will be far greater than the announced 4.9% for UPS and 3.9% for FedEx. Neither company is trying to intentionally mislead its customers. However, the carriers pricing model is not a one size fits all model. Customers have specific rate tables that reflect specific discounts for zones, weights and service types. Therefore, to understand the true impact, those factors must be taken into consideration. Factors to consider include:
1. Neither carrier calculates how the overall impact of its accessorial charge increases will impact the rate increase. (Accessorial charges for FedEx increased by 7.6%)
2. Neither carrier calculates how the rate increase in Zones 2 and 3 (where most shippers ship their packages) or how the rate increase at the 1-5 pound weight break (into which most packages fall) impacts the overall rate increase.
3. Neither carrier calculates how the minimum charges will impact the overall “published” 2014 rate increase. (UPS 2014 Ground Minimum Charge Rate Increase = 6.8%) Many packages are shipped at this minimum rate.
4. Neither carrier calculates how the rate increase differs by weight break. As the weight increases, the increase decreases. The vast majority of our average client’s packages fall within a 1 – 10 lb. weight break
So, what does it all mean? It means that in order to understand the true impact of the rate increases, companies will need to do a little leg work to understand important factors like weight and zone distribution as well as an overall service level usage breakdown. Companies like VeriShip provide this type of analysis at no charge as part of our Business Intelligence Suite.
Jeff Lindmark is with VeriShip, a company that saves companies money on UPS and FedEx shipping through a software program that automatically downloads/imports carrier invoices and securing refunds for late deliveries and billing errors. The only charge for the service is a percentage of the refunds clients receive. In addition to securing refunds, VeriShip provides cost saving analytics to drive process improvement and robust reporting tools to measure costs and automate accounting functions like GL coding and Cost Center Allocation. Contact Jeff.Lindmark@veriship.com, 800.903.3073 or www.VeriShip.com