Continuing in our series of “The Devil is in the Details,” both UPS and FedEx are expanding their Additional Handling Fee Surcharges to packages that actually weigh or where their billed dimensional weight is between 50 and 70 pounds. Prior to this latest change, the Additional Handling Surcharges did not apply unless the package weight was 70 pounds or over.
UPS’ 2020 increase will become effective on December 29, 2019 and FedEx’ 2020 increases will actually become effective on January 6, 2020.
It’s obvious that this change will involve a significant number of additional packages that will now be subject to the Additional Handling Surcharge. By some estimates this change will double the amount of packages that will now be subject to Additional Handling Fee Surcharges.
So to put this increase into perspective, we are providing the following example of an actual UPS Shipper who ships approximately 3000 total packages per week. For this shipper alone, approximately 4.5% of these shipments will now be subject to the Additional Handling Surcharge. Remember, the new Additional Handling Surcharge is on top of the announced 4.9% increase UPS will apply starting December 29, 2019.
For starters, the base rate for a 50 pound shipment from Elgin, IL to Dayton, OH will increase by 5.7%, not the 4.9% “on average” increase UPS announced last week. The current cost this shipper would pay for this 50 pound shipment is $11.57 with the shipper’s current discounts.
Under the new General Rate Increase, as well as the Additional Handling Surcharge increase, the cost for this shipper come December 29th for that same 50 pound shipment will be $25.10, a 117% increase in total costs. And, this includes the shipper’s current discount on Additional Handling Fees, plus the current fuel surcharge. Without this shipper’s current discount on Additional Handling Fees, the shipment would actually be $37.98 or a whopping 228% increase.
So, where do parcel shippers go from here? The first and most critical step is to evaluate exactly how this increase will affect their budgets going forward. No company would ever factor in a 117% increase, let alone a 228% increase to their freight budgets for a substantial amount of packages they ship, so right off the bat they are going to have significant budget woes come 2020.
Having said this, most companies do not have the capabilities in house to make these comprehensive data evaluations and therefore must rely on outside help to get the information they need before it’s too late.
Parcel Audit Firms and Third Party Consultants specializing in freight cost analysis are the keys to evaluating the actual impact of these increases on a shipper by shipper basis, as well as proving concrete solutions for companies seeking to finally take control of their parcel shipping expenses.
So if your company is eager to find out how the combination of these multiple increases will affect your business, please contact us at 516 822-1183 and speak with our Analytics Team to find out how you can finally take control of your parcel shipping expenses. We look forward to hearing from you.
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