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Breaking: UPS Announces Rate Increases- Get the Comparison Charts Free Now!

–Be sure to email us to get the UPS and FedEx Rate Comparison Charts for 2017 vs 2018–

In the Parcel shipping game of “Follow the Leader”, UPS, as expected, has followed FedEx’ footsteps by announcing their Annual General Rate Increases which will become effective on December 24, 2017.  As usual, the UPS General Rate Increase will affect all UPS Ground, UPS Air, UPS International Services, as well as all UPS Air rates within and between the US, Canada and Puerto Rico.

In UPS’ announcement the aforementioned rates will be increased “on average” 4.9%.  Bear in mind, the key words here are “on average” with some rates increasing less than 4.9% but others increasing at much higher percentages than the 4.9% average.

Another critical component of UPS’ General Rate Increase becoming effective on December 24, 2017 will be the reduction in the Dimensional Weight Divisor for small packages measuring less than one cubic foot.  The divisor will be reduced from the current divisor of 166 to 139.  UPS will now mirror the Dimensional Weight Divisor that FedEx has previously published.  This change will result in increases for these types of packages well above the 4.9% average and in many cases will result in rate increases of at least twice the 4.9% “average.”

Additional increase percentages worth noting are as follows:

Large Package Surcharges will be increasing 14.3% to $80.00 effective on December 24, 2017 and will increase again on July 8, 2018 to $90.00, which will be an additional increase of 12.5% for an overall increase of 28.6%

Minimum Charge for Ground Shipments will be increasing 3.42%.  The new Minimum Charge will be $7.57

Additional Handling charge will increase 10.6% on December 24, 2018 to $12.00 and then will be increased again on July 8, 2018 to $19.00.  The overall increase from the current charge of $10.85 to $19.00, the charge after the July 8, 2018 increase, will actually be 75.1%

However, the General Rate Increase Winner is the “Over Maximum Limits” Surcharge, because that charge will increase a whopping 233% from $150.00 to $500.00.

It’s time for shippers subject to the “Over Maximum Limits surcharges to realize UPS and FedEx for that matter, really do not want those products in their parcel networks and for good reason.

To assist our readers in digesting these latest UPS increases, we have created a 2017 vs. 2018 comparison chart for UPS rates and surcharges.  Simply email ANuzio@icclogistics.com to request your free copy and don’t forget, we Also a reminder, we previously published a similar chart for the FedEx General Rate Increase so feel free to ask for that too so you have the increase impact for both FedEx and UPS.

 

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Bloomberg: Amazon Testing Rival to FedEx/UPS

Some folks were surprised when Bloomberg News and other news sources reported yesterday that Amazon was experimenting with their own delivery network which could come at the expense of their current business partners UPS and FedEx.  The reality is that Amazon’s move into establishing their own delivery network has been in the works for years now.

The real question that remains to be answered is whether Amazon can and/or is willing to build a complete delivery network here in the US and therefore no longer have a need to use UPS or FedEx for their domestic deliveries.  We doubt that will ever come to pass completely, but we are sure that Amazon will at some point in the future be a major delivery service provider in many of the major metropolitan areas of the US.  They have been building and fortifying those metro delivery networks for years now and will be a strong delivery force in many major metro area’s for sure.

There also remains the possibility that Amazon will compete head to head with both UPS and FedEx for parcel deliveries from other shippers at some point in the future.  We believe that Amazon has felt for quite some time that the costs to deliver parcels through UPS and FedEx are more costly than what Amazon believes they should be.  Perhaps if Amazon does compete head to head with the two parcel giants, they may find out that reducing those costs may not be as easy as it seems.

 

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Breaking: FedEx Announces 2018 Rate Increases

JUST IN: FedEx Announces 2018 Rate Increases–Parcel and LTL Rates on the Rise AGAIN!

–To download your 2017 VS. 2018  FedEx Comparison Charts free of charge click here 

It should come as no surprise to parcel, and LTL shipper’s for that matter, that they will once again be faced with higher prices come the New Year.  This is an annual ritual called “Annual General Rate Increases” and the first major parcel carrier to announce these increase is FedEx.  You can bet that UPS’ announcement of their Annual General Rate Increases will be right around the corner.

So here is a look at what the increase will look like and how it will affect FedEx parcel and LTL shippers starting on January 1, 2018.

Effective Monday, January 1, 2018, the following FedEx rates will be affected by the General Rate Increase FedEx announced on Tuesday, September 19, 2017.

  • FedEx Express
  • FedEx Ground
  • FedEx Home Delivery
  • FedEx Smart Post
  • FedEx Freight

FedEx Express Package and Freight Standard Rates will increase “an average” 4.9% for US, US Export and US Import shipments.

FedEx Ground and FedEx Home Delivery Standard list rates will also increase “an average” 4.9%

FedEx Freight rates will also increase “an average” of 4.9%

The key words here are “an average” which obviously means that some rate increases will be lower than the 4.9% and that’s the good news, but some rates will be increased even higher and that’s obviously the bad news.   How will your shipments be affected by these increases?  That will require a deep dive into your shipment characteristics to determine exactly how your company will be affected by these increases.  And, if your company does not have access to the granular shipping characteristics data, then you will be in for a big surprise in the New Year.

If you’re a FedEx One Rate Pricing customer, there is some good news for you, the average increase for those rates will only be 3.5%, sounds like a bargain to us.

FedEx also announced that effective January 22, 2018, they will make changes to their Additional Handling, Oversize and Ground Unauthorized Surcharges, as follows:

  • Additional Handling

The Additional Handling Surcharge will apply to any FedEx US or International Express package that measures greater than 48 inches along its longest side.  All other Additional Handling Surcharge size, weight and packaging parameters remain unchanged.

  • Oversize Charge

The oversize Charge will apply to any FedEx Express US package or FedEx Ground package exceeding 96 inches in length or 130 inches in length and girth.  The shipping charges for an Oversize package will be based on the greatest of the packages actual rounded weight, dimensional weight and 90 pounds.

The shipping charge for a Ground Unauthorized package will be based on the greatest of the packages actual rounded weight, dimensional weight and 90 pounds.

  • Third Party Billing Surcharge

A Third Party Billing Surcharge will apply to shipments that are billed to a Third Party.  The surcharge will be charged to the third-party payer of the freight charges.  FedEx recommends that all shipper’s review the FedEx Service Guide for their definition of a “Bill Third Party” shipment, that is sound advice.

For all FedEx Express and FedEx Ground US and International shipments, the surcharge will be 2.5% of “TOTAL” shipment charges, so that includes Fuel as well as any other d=fees associated with the shipment.

FedEx points out that the surcharge applies when the shipper account number and the third party billing account number are NOT part of the same company.

  • FedEx Freight Over Length Surcharge

The FedEx Freight Over Length Surcharge will apply to shipments that contain any handling unit with a dimension of 8 feet or greater in length and less than 12 feet in length.  Multiple piece shipments that qualify for both the Extreme Length Surcharge and the Over Length Surcharge will be charged only the Extreme Length Surcharge.

  • Dimensional Weight Pricing for SmartPost

FedEx will also implement a Dimensional Weight Factor of 139 for all SmartPost packages.  This pricing change can have quite an impact on shippers who previously utilized SmartPost services as a means to keep their shipping costs under control.

Let’s also not forget that FedEx is implementing increased shipping surcharges for the upcoming holiday season which become effective on November 20, 2017 and will continue in effect until December 24, 2017.  Those surcharges were detailed in our Logistics blog at www.icclogistics.com on August 7, 2017.  The bottom line, it will be financially painful this holiday season and you can bet for every holiday shipping season from now on.

Not sure how your company will be impacted by these FedEx increases?  Contact ICC Logistics at 516 822-1183 and speak to one of our experts and let us help you navigate the very muddy waters of these General Rate Increases.

To download your 2017 VS. 2018  FedEx Comparison Charts free of charge click here 

A FedEx truck is parked next to a UPS truck as both drivers make deliveries in downtown San Diego, California March 5, 2013.  REUTERS/Mike Blake

Will FedEx “Me Too” UPS and add Peak Surcharges?

Ever since last week when UPS announced the “Peak Surcharges” they will be applying to various shipment types during the November/December holiday shipping season, many shippers are wondering will FedEx follow suit and add their own peak surcharges.  And, that my friends is a very good question.  Without a crystal ball it’s anyone’s guess but we thought we’d explore this issue to see if we could find any signs that would point to the decision FedEx may or may not ultimately make.

For one thing, FedEx recently reported their fourth quarter earnings and they were spectacular, with a quarterly profit of over $1 Billion; very impressive.  So what drove this huge increase in profits for FedEx; a couple of things.  First and foremost was the reporting of revenues derived from FedEx’ TNT Express acquisition.  This included restructuring charges, and $20 Million in TNT Express intangible asset amortization expenses, as well as $37 Million of integration expenses.  From there FedEx reported increased revenues of 7% on increased package volumes, as well as growth in International Export activity which contributed an additional 5% growth.  FedEx also reported that their higher profits were a direct result of higher base rates.

Higher base rates we believe were achievable through several measures FedEx has taken over the past year or so to shore up its profits, including the reduction in Dimensional Weight Divisors resulting in higher yields per package for dimensional rated parcels.  Also, the elimination of refunds for late delivered packages which had been an integral part of FedEx’ contracts with their shipper customers.  While many shippers still maintain the ability to file claims for refunds for late delivered packages, apparently, many of the new contracts Fedex is implementing contain waivers which prohibit shippers from filing refund claims for these late delivered packages.  Obviously, other cost containment initiatives FedEx has been continually implementing and improving continue to pay off.

So, with these increases in profits, will FedEx opt in on surge pricing, AKA “Peak Surcharges” or will they let UPS be the “bad guys” and try to siphon business from UPS during the peak holiday shipping season?  The reality of the matter in our opinion is that FedEx can ill afford to add significant volumes of packages during the peak holiday season as that would wreak havoc on their operations and potentially jeopardize service to their current large shippers.  In fact we believe that much of the profit FedEx has derived from increased package volume has actually come from the peak holiday periods in late November and December.

So having said that, we believe that FedEx has absolutely nothing to lose by “me tooing” the Peak Surcharges UPS has scheduled to become effective for this coming holiday season.  However, whether they do it or not remains to be seen.  Still waiting for that crystal ball.

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Customer Demand Results in Added Supply

We are all well aware of the theories of supply and demand and its relationship to costs for businesses.  Well customer demand in the package delivery arena has now caused UPS to make a significant service enhancement to their operations by providing Saturday delivery for Ground packages to compete with both the USPS and UPS rival, FedEx Home Delivery.

Retail customers can now receive Ground packages on Saturday and not have to wait until Monday to receive them.  On the other side of the coin, retail shippers can ship packages on Saturday and expect Monday delivery to next day delivery zones.  Another interesting fact is that UPS expects to add 6000 new jobs once this massive change is totally implemented, and that’s great news for the overall economy.

Want more reasons as justification for UPS to make this change; UPS expects that residential deliveries will represent more than half of their delivery business by 2019.  Saturday operations will also allow UPS to flush it’s system over the weekend before the big Monday rush of packages, so overall it’s a good move for UPS.

Expect UPS Saturday Ground delivery to roll out this month in major US cities such as, New York, Chicago and Boston.  This operational change will give on-line shoppers another reason not to go to the mall.  So the only remaining question is, when will we see Sunday deliveries for FedEx and UPS?  We suspect it may not be that far away.

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The Three Biggest Mistakes Parcel Shippers Make!

Several key factors in today’s fast-paced business world are driving the explosive growth of online shopping.  These factors, such as millennials, (and others for that matter),desire to shop on line, rather than in physical stores; the growth of entrepreneurs starting new businesses to sell just about anything online; and manufacturers needing to sell at the wholesale as well as at the retail level.

The net result of these factors and others, is more and more companies are utilizing parcel carriers to deliver their products to the ultimate consumer.  With this growth comes a need and responsibility to clearly and thoroughly understand all of the rules, regulations, rates, shipping options and legal ramifications of dealing with the parcel industry as a whole.  Today, we’d like to explain what we believe are the Three Biggest Mistakes Parcel Shippers Make.

  1. Not Benchmarking Competing Carrier’s Rates and Services– The first mistake we believe parcel shipper’s make is not understanding all of the options available to them from the ever-growing list of parcel carrier service providers.  Time and time again we witness shippers who never step outside their comfort zone to interview, review and analyze various competing carrier services to benchmark whether they have a good deal or not.  The reality is, if a shipper does not continually benchmark their services and rates they are paying, by default, they accept the status quo and oftentimes that means paying much more for transportation services than they really need to.

Yes, we thoroughly understand that switching volumes of business from a long time preferred parcel carrier may come with some implementation pain.  However, if a parcel shipper does not test the competitive waters they may be boxing themselves into paying higher rates year after year.  Another key point to take into consideration is service level comparisons.  Oftentimes, regional parcel carriers can deliver products faster in certain lanes compared to some national carriers.  What about USPS as an alternative?  This is not your father’s Post Office any longer.

Some additional food for thought; do cable companies, home alarm companies, mobile phone service providers, and other service companies charge their longtime customers more for services than they charge their new customers?  You bet they do and unless a parcel shipper analyzes all of the options available to them on an on-going basis, they will probably pay more year after year as well.  If a parcel carrier feels they have a “lock” on a shippers business, (primarily because the shipper has never utilized a bid process to evaluate the benefits of competing carriers), what incentive would that carrier have to publish lower rates?  That’s correct, absolutely none.  The fact is the incumbent carrier may turn out to be the best choice for a particular shipper, but unless that shipper benchmarks services and rates of competing carriers, they will never ever really be sure.

  1. Read The Fine Print, and More– Most parcel carriers provide their shipper customers with a pricing agreement or contract which outlines the various services to be provided and the associated rates and charges they have agreed to assess for those services.  Warning to parcel shippers!  Don’t just sign the agreement without reading it thoroughly to make sure all of the terms and conditions are EXACTLY as you and the carrier agreed to.  Here are several questions we would ask every parcel shipper who has recently negotiated a new pricing agreement or re-negotiated a contract with a parcel carrier.
  • Did you agree to a Guaranteed Service Refund Waiver with your parcel carrier sales representative?  No, then why is it now in your contract?
  • What Dimensional Weight Divisor did you and the parcel carrier agree would be published?  Is that the Divisor that is now published in your new contract?
  • Do you understand that many parcel carriers make their contracts subject to provisions of a service guide that is not a physical part of the transportation contract you are signing?
  • Do you know the parcel carriers can change the provisions of those service guides at will and do not need to specifically notify each and every one of the customers when they do?
  • Parcel carriers typically provide differing pricing incentives for various service levels, are you sure all of the discounts and incentives have in fact been published exactly as you and the parcel carrier agreed to in your negotiation sessions

Why ask these questions?  Precisely because for some parcel shippers these exact issues have arisen and many of these companies never identified them until it was too late; so our advice to all parcel and freight shippers for that matter is; Caveat Emptor, let the buyer beware!

And, one final point, a very important point; we strongly recommend that each and every parcel carrier contract, or any transportation or logistics services contract for that matter, should be reviewed by a                 qualified Transportation Attorney, before any of those contracts are signed.

  1. Continually Audit Parcel Carrier Invoices– Once the contract has been signed, all parcel shippers should ensure they have a qualified third party audit firm auditing each and every invoice to make sure the rates being charged are the rates the shipper agreed to in its pricing agreement or contract.  The auditors will also be able to file for refunds for Guaranteed Late Delivered packages, as long as the shipper has not waived their right to file such claims.

Parcel Audit firms also provide on-line access to their client’s pertinent shipping data and can even report results based on specific Key Performance Indicators (KPI’s) their shipper customers agree to.  They also provide continuous and meaningful reports on a variety of different metrics so the parcel shipper always has their finger on the pulse of what’s going on with their parcel shipping expenses.  We’ve all heard the statement, “you can’t manage what you can’t measure” and unless your firm has the technical expertise to generate this critical shipping data in-house, outsourced parcel audit firms have all the reporting power a parcel shipper would ever need.

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