Hopefully by now, all shippers are digging into to determine the true impact of the 5.9% General Rate Increases announced by FedEx and UPS. As we have stated over and over again, taking the announced percentages at face value can be detrimental to a company’s bottom line! Our goal has been to help educate shippers, to ensure that they are in a position to plan an accurate 2025 budget, and determine what adjustments need to be made to shipping rates and policies to protect profits. The onslaught of new and creative tactics being deployed by the major carriers is making it more and more difficult for shippers to plan effectively.
We have taken efforts to make shippers smarter in two ways. First, we have been performing GRI Impact analyses for customers that request this. Our analyses will provide shippers with an extremely accurate projection of the specific impact that UPS and FedEx Rate increases will have on their shipping costs (reach out to us to determine if your company is eligible for a free analysis!)
The second way we have been trying to help shippers, is by taking a deeper dive into the rate change announcements made by the parcel carriers. For the past couple of years, we have seen the major carriers make subtle announcements regarding some of the changes they are making. Some of these subtle announcements seem to be lacking specifics of the changes being made.
For example, in August, UPS announced “The UPS Tariff/Terms and Conditions of Service” and the “UPS Rate and Service Guides” have been updated effective August 18th, 2024. Given the vague statement that UPS made, ICC Logistics chose to take a closer look, and discovered that they had increased charges for Address Corrections, Missing PLD, as well as Chargeback and Audit fees. We reported this information in a blog that we released, and was published in Parcel Media on September 10th, 2024.
Given our ongoing desire to keep shippers properly informed of Rate Increase details, (especially the ones that are barely announced, or not announced at all!), we have continued to dig deeper. As promised in our last blog related to the UPS GRI, we have completed an analysis of the zip code pair changes that UPS put into effect on October 21st, 2024. It is important to remind everyone that this is the third time within a year that, UPS has implemented changes to zip code pairs.
It is also important to remind everyone that an increase in Zone can increase shipping costs significantly for impacted Zip Code pairs. Our analysis has shown that the published cost of shipping Ground packages can increase by almost 25% in some cases. We also discovered that the published cost for 2nd Day Air shipments can increase by over 50%, and by over 100% for some Next Day Air shipments. We would be glad to provide a breakdown of the cell by cell increases by clicking here.
Here is a summary of our findings from our most recent Zone Chart Comparison:
We compared UPS Zone charts from 75 different origin locations that were in effect in June of 2024 to the new UPS Zone Charts UPS released on October 21st, 2024. Most of the zip codes we looked at are ones that are popular locations for Distribution Centers. We found that the 75 Zone charts we looked at had a total of 811 zone changes, of which 568 or 70% were adjusted to higher zones.
We did see changes in every one of the Zone charts we analyzed. However, the largest number of zone changes for any particular origin zip we analyzed was 30, and these changes occurred from origin zip codes in the following locations; Cleveland OH, Harrisburg PA, Chicago IL, and Louisville, KY.
However, we found that zips in Indianapolis IN, Nashville TN, Minneapolis MN, and Chicago IL had the largest number of jumps to a higher zone (either 28 or 27 Zip code pairs had zones increase).
Of all the zone changes, 17.9% are from zone 4 to zone 5; 14.6% are from zone 3 to 4; 13.6% are from zone 5 to 6 and 13.0% are from zone 2 to 3.
For anyone that is interested to find out if we had included their Origin Zip code in our analysis or if you would like to review the complete findings of our analyses, feel free to reach out to us by clicking here.
The last time UPS announced changes to zonal pairs was back in June of 2024. After the announcement, we did a similar analysis and found that there were 575 zone changes of which 76% resulted in higher zones.
It is pretty obvious that these types of “invisible rate increases” are starting to become more common place. Obviously our analysis does not take every US Zip code origin into consideration. However, our findings do suggest that UPS is increasing Zones between more and more zip code pairs. Given the ongoing pressure for UPS to increase profitability, we feel that this approach is likely to continue.
Therefore, ICC Logistics will continue to monitor for additional changes. We are certain that there is more to come from both UPS and FedEx with their 2025 General Rate Increases. Details of new rates and rules have continued to trickle out from both carriers, and from what we can tell, neither one of them have completed the process. But then again, it doesn’t seem that the process is ever complete given that rate increases now seem to happen throughout the year.
If the carriers continue to try to sneak in new rate increases and fail to tell you about them- DON’T WORRY, YOU WILL MOST LIKELY HEAR ABOUT THEM FROM US!
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