UPS adds “Peak Season” Shipping Surcharges
/in Contract Negotiations, Industry News, Industry Trends, UPS/by Erman EyubogluWe’re not sure if parcel shippers have been getting accustomed to having their rates increased every few months, but whether they are getting used to it or not, the parcel carriers are in the driver’s seat for sure; at least for now.
UPS has just announced another wave of surcharge increases, some going into effect on July 1, 2021. UPS states in their official announcement that these increase are necessary for them to “ensure businesses and customers are able to meet their shipping needs while demand has increased for shipping services.”
Read the official announcement and get more details here.
As UPS goes, FedEx will probably be right behind with their surcharge increases. And remember, we are not anywhere near the official “Peak Shipping” season. The reality is that for as long as the parcel carrier volumes increase at record paces, shippers will need to adjust their budgets on a quarterly basis. Annual Shipping Budgets are a thing of the past. In addition, Single Sourcing may become a thing of the past as carrier capacity constraints will continue, at least for the foreseeable future so shippers will need to find other outlets for their excess parcel capacity. But remember, the pendulum swings in both directions and if we have a downturn in the economy, which is a real possibility in the near future, the parcel carriers may be more inclined to “pay back” some of these increased costs with deeper discounts to retain their customers.
And, let’s not forget that the best thing a parcel shipper can do is have their parcel shipping costs Benchmarked by an Independent Third Party on a regular basis to make sure they are not paying more than they should, based on their ever-changing shipping characteristics.
Contact us today to learn more.
FedEx Announces Updates to Fuel Surcharges
/in FedEx, Industry News, Industry Trends/by Erman EyubogluAs a reminder, back in May, FedEx announced that they would be updating their Fuel Surcharge Tables to better reflect current market conditions. FedEx, as well as all other freight carriers adjust their Fuel Surcharge percentages on a weekly basis as the price of fuel fluctuates. This amendment to FedEx’ Fuel Surcharge Tables will officially go into effect on June, 21, 2021.
The updates will result in a change in the Price per Gallon bands used to calculate both US Gulf Coast Spot Prices for Jet Fuel, (applied to FedEx Express Service rates), as well as the US Highway Average Price of Low Sulphur Diesel Fuel, (applied to FedEx Ground services.) It is expected that these rate table changes will result in an overall Fuel Surcharge increase of approximately 1%. This is on top of already increased costs of fuel, as well as many new and ever increasing surcharges and accessorial fees. While carriers may believe these increases are not staggering increases, they are increases non-the-less. Let’s also keep in mind that recent reports indicate the rate of inflation is also increasing and that too will result in higher prices across the board for all consumers. It’s like the old saying of being “Nickeled and Dimed to Death.” However, as we have seen over the past year and a half, we are not talking about Nickels and Dimes, but rather dollars and serious ones at that.
The Fuel Surcharge Tables FedEx is published will become effective on 6-21-2021.
Looking for ways to control rising parcel shipping costs? Check out our carrier rate negotiations services.
USPS Proposes Rate Changes
/in Industry News, Industry Trends/by Tony NuzioAs part of “Delivering for America,” its 10-year plan to achieve financial sustainability and service excellence, the United States Postal Service filed notice last Friday with the Postal Regulatory Commission (PRC) proposing price changes to take effect Aug. 29, 2021 that are in accordance with the rules recently established by PRC last year.
The proposed price changes would raise overall Market Dominant product and service prices by approximately 6.9 percent. First-Class Mail prices would increase by 6.8 percent to partially offset declining revenue due to First-Class Mail volume declines. In the past 10 years, mail volume has declined by 46 billion pieces, or 28 percent, and is continuing to decline. Over the same period, First-Class Mail volume has dropped 32 percent, and single piece First-Class Mail volume — including letters bearing postage stamps — has declined 47 percent.
“For the past 14 years, the Postal Service has had limited pricing authority to respond to changing market realities,” said Postmaster General and CEO Louis DeJoy. “As part of our 10-year plan to achieve financial sustainability and service excellence, the Postal Service and the Board of Governors are committed to judiciously implementing a rational pricing approach that helps enable us to remain viable and competitive and offer reliable postal services that are among the most affordable in the world.”
The proposed Mailing Services price changes include:
Product | Current Prices | Proposed Prices |
Letters (1 oz.) | .55 cents | .58 cents |
Letters additional ounce(s) | .20 cents | .20 cents (unchanged) |
Letters (metered 1 oz. | .51 cents | .53 cents |
Domestic Postcards | .36 cents | .40 cents |
Flats (1 oz.) | $1.00 | $1.16 |
Outbound Int’l Letters | $1.20 | $1.30 |
Under the current pricing model and the proposed rate change, the Postal Service still has some of the lowest letter-mail postage rates in the industrialized world and continues to offer a great value in shipping.
The Postal Accountability and Enhancement Act (PAEA) of 2006 capped price increases for mailing services at the Consumer Price Index (CPI). The PAEA also required the PRC to evaluate the price cap system 10 years after the date of enactment and to modify or replace the system if it was not meeting the objectives of the law. The PRC recognized the price cap was a barrier to the Postal Service’s financial sustainability in December 2017, resulting in cumulative lost gross revenue opportunity of $55 billion. In May, the Postal Service reported a net loss of $82 million for the second quarter of 2021.
In November 2020, the PRC announced new rules on market-dominant prices, allowing above-CPI price increases on the basis of certain factors and allowing the Postal Service more flexibility in establishing prices for mailing services.
“November’s PRC ruling allows the Postal Service higher rate authority in establishing prices for mailing services,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “Aligning our prices for market-dominant products will allow us to grow revenue and help achieve financial sustainability to fulfill our universal service mission.” Read more
Ocean Freight Rates on the Rise With No End in Sight!
/in Industry News, Industry Trends/by Tony NuzioAs we have been accustomed to seeing over the past year and a half, additional ocean freight rate increases are on the way again; this time beginning in the third quarter of 2021. So, as we get closer to Peak shipping season, we can be assured that this trend is now officially the norm, rather than the exception. And, what we have been learning over the past year and a half is that all importer’s freight budgets will be tested to the limit and beyond. At what point will we see companies cutting back on imports especially for those products with small margins of profit. On the other hand, will this trend now entice more and more companies to source their goods closer to home? Only time will tell!
Effective July 1, 2021, a General Rate Increase (GRI) has been filed for all cargo imported from Asia ports of loading, to U.S.A., Canada, and Mexico ports/ramps of discharge.
The proposed increases are as follows:
USD 900 / 20′
USD 1,000 / 40′
USD 1,125 / 40′ HQ
USD 1,125 / 40′ Reefer
USD 1,266 / 45′
USD 1,600 / 53′
Looking to gain control over rising costs? Contact us today to learn more.
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