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USTR Soliciting Comments on China 301 Tariff

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COMMENT PORTAL OPENS ON NOVEMBER 15, 2022

Our friends at the Law Firm of GDLSK have provided the following update regarding the effectiveness of the China 301 Tariff provisions.  As part of its review of the future of the China 301 tariffs, the Office of the U.S. Trade Representative (“USTR”) is soliciting public comments as to the effectiveness of these tariffs, (or other actions that could be taken), and the corresponding effects on the U.S. economy.  In a prior action, the USTR sought input from the domestic industry as to whether the 301 action should remain in effect.

In connection with this stage of its review, the USTR will be opening a public comment docket on November 15, 2022 to allow interested persons to comment on any aspect of the proceeding, including:  The effectiveness of the 301 tariff actions in obtaining the elimination of (or in counteracting) China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.  Other actions or modifications that would be more effective, including the effects on:

  • the U.S. economy, including U.S. consumers
  • domestic manufacturing (including in terms of capital investments, domestic capacity and production levels, industry concentrations, and profits
  • U.S. technology (e.g., in terms of U.S. technological leadership and development).
  • U.S. workers, including with respect to employment and wages
  • U.S. small businesses
  • U.S. supply chain resilience
  • U.S. critical supply chains
  • Whether the 301 actions have resulted in higher additional duties on inputs used for U.S. manufacturing as compared to the additional duties on downstream products incorporating those inputs.

In order to facilitate preparation of comments prior to the November 15th opening of the web portal, the USTR has posted a preview copy of the questions for this docket here.  Questions solicit economy-wide comments; sector-specific comments; and comments on particular tariff provisions.

For more information, please contact us and we’ll put you in touch with our friends at GDLSK.

Breaking: UPS Announces Rate Increases

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We’ve highlighted everything a shipper needs to know, plus your free rate comparisons

This week, as expected, UPS announced “an average” General Rate Increase (GRI) of 6.9% for 2023, which matches the average GRI increase that FedEx announced back in September.  As with previous years, UPS’s rate increase will take effect a week earlier than FedEx (December 27, 2022 vs. the FedEx increase which takes effect on January 2, 2023.) 

As always, it is imperative that shippers do not take these communicated increase levels at face value, as these are purely averages. Historically, the impact to shippers has been vastly different from the average increases that the carriers have announced. We have seen many companies use carrier announced average rate increase amounts in their budgeting and projection processes. This could be a major mistake, since it is not uncommon for the actual increase in cost for shippers to be far greater than the announced percentages.  So, failure to fully understand and analyze the impacts of these GRI’s can have a major impact on company profits and bottom lines.

Breaking it all down

By now we know that the increases that carriers put in place vary across their rate cards. Often the average increase amount is driven by higher increases in lighter weight / lower zone packages, offset by lower increases in higher weight/ higher zone packages. So, it is critical for shippers to know where their average package weights and zones fall to understand this aspect of carrier rate increases. 

Here are our key findings related to the UPS Package increases for 2023 courtesy of Laura Schwier, ICC Logistics’ President:

  • There are some very interesting increases scheduled for 2023.  For example, both FedEx and UPS increased the zone 205, 2Day air rates by 8.9%, while the rest of the zones averaged 7.5%.  
  • For UPS, the Ground minimum charge increased 7.9% compared to last year’s 6.8%. In dollars and cents, the charge went from $9.36 to $10.10.  
  • Almost all of the averages are higher than the 6.9% stated in the UPS announcement, but that’s usually what happens. 
  • As always, the 3 Day Select pricing is less expensive than the Express Saver Pricing, so these variances are of no surprise.

The UPS rate increases seem to be in line with where FedEx increased their rates as can be seen in the comparison of the FedEx and UPS 2023 vs. 2022 Rate Increase Charts which are available below to our readers by clicking the link below.

FedEx List Rates 2023 vs UPS List 2023 Chart

Surcharges and Other Rate Changes

Additionally, we have determined that it is equally important to pay close attention to carrier Accessorial Rate and Rule changes due to the impact that these can have. Back on October 6th, we published a blog that called out changes that both UPS and FedEx had made to their Delivery Area/ Extended Area surcharges. For 2022, UPS had created this new category of Delivery Area Surcharges for what they consider “Remote Areas.” FedEx jumped on the band wagon with this for 2023 as well. 

With this, both carriers have moved Zip Codes from their list of locations that received Delivery Area or Extended Delivery Area surcharges, to this new, higher priced surcharge category, (FedEx’s rate for Remote Destinations is $13.25, UPS’ 2023 rate is $13.05). This is a significant increase in costs for shipments to these zip codes, in some cases, as much as 300%!) In addition, UPS added approximately 500 new zip codes to their list of approximately 2700 Remote Area zip codes from 2022 (now a total of approximately 3200 for 2023). FedEx has almost 4000 zip codes that will receive this new Surcharge in 2023.

On top of this, for 2023, UPS has increased their rates for Delivery Area/ Extended Delivery Areas.  The published Delivery Area/ Extended Delivery Area Surcharge Rate for Ground Residential shipments will increase from $4.80/$6.50 to $5.30/ $7.15.  This equates to an increase of over 10%.  So, it is obvious where the trend is going with these surcharges. 

FedEx Fee & Surcharge Rates 2023 vs 2022 Chart

UPS Fee & Surcharge Rates 2023 vs 2022 Chart

A Note About Rate Caps

It is also important to note that shippers that have Rate Caps in place with parcel carriers, are often not protected from Accessorial rate increases or rule changes. Typically, Rate Caps are only applied to shippers’ Package Rates and Discounts. Accessorial rate increases are usually not limited by contractual Rate Caps. Also, in many cases, existing discounts do not apply to newly added surcharges. For example, a shipper with existing discounts on Delivery Area/ Extended Delivery Area Surcharges will not automatically receive these discounts for the newly added Remote Area Surcharge. So, it is important that shippers don’t assume that the terms of their current carrier agreements protect them from the ongoing barrage of Accessorial Rate increases and rule changes. 

UPS’ GRI Information Still Unclear

In their GRI announcement, UPS also states “The list of ZIP codes aligned to certain zones will change”. At this point, there are no details that allow us to gauge the full impact of this. However, ICC will continue to monitor this situation, and communicate our findings. Obviously, this could be another scenario that could have a serious impact on shipper’s costs. 

A few other items related to the UPS GRI announcement that are worth mentioning- 

  1. UPS has not yet announced Rate Changes to their SurePost product. So, please stay tuned for details of this. 
  2. They have announced a change in verbiage related to “Peak Surcharges”.  The announcement indicated that “Peak/Demand Surcharges will also be referred to as Demand Surcharges.” This is an interesting change, and suggests that UPS might be looking to create additional flexibility when/ where they can put these surcharges into effect. 
  3. It will be interesting to see how the UPS Teamsters utilize these record Rate Increases in their 2023 contract negotiations with UPS. Historically, Teamsters have seen wage increases far below the 6.9% GRI increase that was just announced. This could create some interesting leverage for the Teamsters. 

In order to determine the true impact that these announced GRI’s have on total cost, shippers need to fully understand their shipment characteristics. Shippers must be empowered with ongoing reporting and analytics that can help them make important decisions related to product pricing and overall shipping costs. Inaccurate projections related to increased shipping costs will lead to serious profit margin erosion. 

Be In the Know

Find the FedEx and UPS List Rate Comparison Charts for 2022 vs 2023 below by clicking the links provided:

FedEx List Rates 2023 vs 2022 Chart

UPS List Rates 2023 vs 2022 Chart

Remember, you are NOT alone!  Reach out to ICC to find out how we can provide you with the information and tools you need to protect yourself from unforeseen impacts on your bottom line.  We’re here for you every step of the way.  

U.S.P.S Announces New Prices for 2023

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U.S. Postal Service Announces New Prices for 2023-Forever Stamp to Rise Three Cents

The old adage, “what goes up, must come down” certainly does not apply to any parcel shipping rates.  To no one’s surprise, the United States Postal Service, (USPS), has filed a notice with the Postal Regulatory Commission (PRC) of price changes to take effect Jan. 22, 2023. The new rates include a three-cent increase in the price of a First-Class Mail Forever stamp from 60 cents to 63 cents.

If favorably reviewed by the Commission, (and there is no reason to believe it will not be approved), the proposed increases will raise First-Class Mail prices approximately 4.2 percent to offset the rise in inflation. The price changes have been approved by the Governors of the U.S. Postal Service.

 

  • The price for 1-ounce metered mail will increase to $0.60, and the price to send a domestic postcard will increase to $0.48.
  • A 1-ounce letter mailed to another country would increase to $1.45. There will be no change to the single-piece letter and flat additional-ounce price, which remains at $0.24.
  • The Postal Service is also seeking price adjustments for Special Services products including Certified Mail, Post Office Box rental fees, Money Order fees and the cost to purchase Insurance when mailing an item.

The proposed Mailing Services price changes include the following:

ProductCurrent PricesPlanned Prices
Letters (1 oz.)$0.60$0.63
Letters (metered 1 oz.)$0.57$0.60
Domestic Postcards$0.44$0.48
International Postcards$1.40$1.45
International Letter (1 oz.)$1.40$1.45

According to USPS sources, as operating expenses continue to rise, these price adjustments provide the Postal Service with much needed revenue to achieve the financial stability sought by its “Delivering for America 10-year plan.” The prices of the U.S. Postal Service remain among the most affordable in the world.

The PRC will review the changes before they are scheduled to take effect. The complete Postal Service price filing, with prices for all products, can be found on the PRC website under the Daily Listings section at prc.gov/dockets/daily. The Mailing Services filing is Docket No. R2023-1. The price tables are also available on the Postal Service’s Postal Explorer website at pe.usps.com/PriceChange/Index.

And the constant reminder we receive from the USPS every time they increase rates, “the Postal Service generally receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.” 

For more information on this or to find out how to navigate rising transportation and logistics costs, please contact us.

FedEx’s New Rate Increases are Here!

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Everything you need to know about the new FedEx GRIs

Well, it’s that time of year again when we start to receive notices of General Rate Increases (GRI’s), for the major freight carriers.  To start, this year’s parcel carrier GRI notices have been led by FedEx and of course as we all know, this is just the beginning of next year’s GRI notifications.   

The magnitude of the announced FedEx increases comes as no surprise to us.  With all of the recent negative operational and financial news surrounding FedEx, it is not surprising that FedEx’s “AVERAGE” General Rate Increase for this coming year is significantly higher than it has been in the past.  For 2022, FedEx jumped their annual “AVERAGE” GRI from the previous year’s 4.9% to 5.9% .  This year, FedEx is increasing their Annual “AVERAGE” GRI to 6.9% .  Historically UPS’s GRI levels have matched or been very close to those announced by FedEx. We have no reason to believe that this year will be any different.

So, we expect that UPS will announce similar GRI’s in the near future.

It’s important to remember that the term “On Average” means some increases will be less than the 6.9% in certain categories, and some will of course be much higher than 6.9%.  Shippers should not be fooled into thinking the actual increase is 6.9% across the board.  And yet, you would be amazed at how many companies use the average increase figure for their annual shipping budgets. 

Parcel shippers really need to take the time to analyze their individual shipping characteristics to see exactly what the impact will be on their freight costs going into 2023. The FedEx rates will go into effect on January 2, 2023, shortly after parcel shippers incur the Peak Season shipping surcharges, which can also have an unexpected impact on Shippers bottom line profits. 

To put these increases into perspective, the following are some examples of what the “Actual” increase FedEx parcel shippers will experience. 

  1.       Ground Service, 2 Pound Package to Zone 5 – Actual Increase will be 7.6%
  1.       Priority Overnight, 5 Pound Package to Zone 2 – Actual Increase will be 8.5%
  1.       Standard Overnight, 10 Pound Package to Zone 3 – Actual Increase will be 8.5%
  1.       Two Day Delivery, 25 Pound Package to Zone 5 – Actual Increase will be 8.9%
  1.       Express Saver, 5 Pound Package to Zone 8 – Actual Increase will be 11.9%

And that is just the beginning.  The above package rate increases are also subject to a variety of surcharges that are also increasing.  Here is a brief overview of some of FedEx’s actual increases for some of the more common surcharges.

  1.       Address Corrections – 7.7% Increase
  1.       Delivery Area Surcharge – Home Delivery – 10.4% Increase
  1.       Extended Residential Delivery Area Surcharge Ground – 10% Increase
  1.       Oversize Express, Ground and Home Delivery – 17.2% to 22.7% Increase

Besides the GRI, Small Package carriers often introduce new rules and surcharges that can have a major impact on parcel shippers’ bottom lines.  It goes without saying, parcel carrier pricing continues to become more and more complex and difficult to manage on your own.  But remember, you don’t have to navigate these uncharted waters single handedly, there is help available.  

As we have done for over 10 years now, our Parcel Analytics experts has created newly updated 2022 vs. 2023 FedEx General Rate Increase Charts which are available free of charge just by requesting them on our website.   

And, if you really want to finally take control of your parcel shipping costs, reach out to us and speak with one of our Parcel Pricing Experts to discuss how your firm would benefit from our Contract Analysis and Benchmarking Services.       

 

 

So, Do We Really Have a New Rail Labor Agreement?

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According to a report in The Hill, as well as several other sources, the White House-brokered agreement to avert a railroad strike may have the potential to fall apart.  That would threaten widespread economic disruption right before the midterm elections.

Rail workers are set to vote on the tentative deal reached between unions and railroads Thursday, 9/22/2022. And, if any of the 12 rail unions fail to ratify the new contract, nearly 125,000 rail workers could be headed for a strike.  The agreement reached would mandate two-person crews, cap health care costs and allow workers to take time off for medical appointments or other scheduled events without being penalized, all key concessions which were won by the unions.

The deal also provides a 24 percent raise over five years, back pay and cash bonuses, similar terms to those offered by the White House-appointed presidential emergency board (PEB) last month.  But nearly 36 hours after the agreement was announced, rail workers said they still didn’t have concrete details on sick leave and voluntarily assigned days off. That’s raised some doubts about just how strong the new contract language really is.

Ron Kaminkow, an organizer at Railroad Workers United, which represents rank-and-file railroaders, said that there’s “a lot of anger, confusion and hostility” toward the new agreement, which many workers feel is intentionally vague.  Rail workers are apparently disgruntled and feel like they have a lot of leverage at this point.  A locomotive engineer at Norfolk Southern who asked to remain anonymous for fear of retaliation stated, “I know I’m not going to accept anything less than what we deserve.”

The two largest rail unions warned during negotiations that their members wouldn’t approve a contract that doesn’t quell outrage over unpredictable scheduling, unsafe working conditions and a lack of sick leave. For the strike threat to end, workers would need to feel that the proposed contract is far stronger than the deal offered by the PEB. A survey of rail workers at the SMART Transportation Division found that nearly 8 in 10 would have voted to reject that contract.

Another dilemma is that the tentative agreement reached last Thursday only applies to SMART and the Brotherhood of Locomotive Engineers and Trainmen, the two largest rail unions, but not the other unions that agreed to contracts based on the less worker-friendly PEB guidance. Those include nearly 5,000 rail workers at the International Association of Machinists and Aerospace Workers who voted to reject the PEB contract and authorize a strike last week. The union said it would resume negotiations this week and hold off on a strike until at least Sept. 29. Vote counting is certain to drag into October, potentially setting up a key deadline at the height of election season.

Robert Bruno, a professor of labor and employment relations at the University of Illinois, predicted that the deal will ultimately pass but with a “sizeable number of ‘no’ votes.”  “I would be surprised if the bargaining committee misread what the rank and file would support. That doesn’t mean that it will pass with supermajorities,” Bruno said. “That will signal a level of continuing grievance on the part of the membership. It wouldn’t surprise me if a fairly substantial number of members voted ‘no’ in part because of how genuinely abused they feel.”  Bruno also said that the fact that sick leave and voluntarily assigned days off are the sticking points and not wages may inspire more “no” votes from workers.

A strike would shut down the U.S. railroad system, which carries nearly one-third of the nation’s freight, shutting down large portions of the economy. Enormous amounts of food, fuel and other key commodities would have no way to reach their destination.

Reach out to us if you have specific questions we’d be happy to answer them.

Nationwide Railroad Strike Avoided

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As reported in the Wall Street Journal, there’s some good news from Washington, DC.  The nation’s largest freight railroads and union leaders reached a tentative labor agreement to avert a nationwide strike that would have crippled swatches of the U.S. economy.

White House officials interceded to broker a deal to avoid transport disruptions that could have snarled supply chains, putting new pressure on prices when inflation has been hovering near four-decade highs. Business groups and key rail customers, such as energy companies and national retailers, had been calling on the government to avoid a strike.

The overall U.S. job market is tight, with wages rising and unemployment low, and the railroads struggling with service issues they say have been caused by worker shortages. Union members had been working without a contract since 2019 and labor leaders had used the negotiations to protest new attendance policies some of the companies had adopted.

Both sides said Thursday they wrung concessions from the negotiations, which produced a deal that runs through 2024. The terms largely reflected a proposal put forth by a federal panel a month ago, including about 24% in wage increases over five years. The tentative agreement must now be ratified by members of the various unions covered by the contracts.

The deal, which is retroactive to 2019, includes a 14.1% wage increase upon ratification. Workers would then get a 4% raise in July 2023 and 4.5% increase in July 2024, as well as five annual $1,000 lump sum payments. There are no changes to health insurance copays or deductibles in the new deal.

Amtrak said Thursday it was restoring long-distance train services that it had suspended ahead of the Friday deadline for a possible strike. The passenger-rail provider was notifying customers to accommodate them on the next available departures, a spokesman said.

The freight railroads, including CSX Corp. and Union Pacific Corp., this week had started suspending transport of some shipments, including industrial chemicals categorized as hazardous, so the cargoes wouldn’t get stuck in their networks under a strike. Officials from the railroads said they were pleased to avert a work stoppage and were working to fully restore services.

Two unions that had held out for better terms—the Brotherhood of Locomotive Engineers and Trainmen, and SMART-Transportation Division—said Thursday they were able to secure changes to company attendance policies. “For the first time, our unions were able to obtain negotiated contract language exempting time off for certain medical events from carrier attendance policies,” the unions said.

The wages and other contract terms largely followed the recommendations of a federal panel appointed by the White House in July to mediate the dispute. Unions had sought raises of 31% over the five-year term of the contract, while railroads offered 17% before the presidential panel drafted a proposed compromise last month. In the previous five-year contract, wage increases amounted to around 13%.

The annual rate of inflation in August was 8.3% in the U.S. Nationally, average hourly earnings for non-managerial employees were up 6.1% in August from a year before, about the same pace as the past year, according to the Labor Department.

On Wednesday, one of the unions said its members rejected a tentative agreement its leaders had reached, while two others labor unions said their members had ratified the agreements. Members of the International Association of Machinists and Aerospace Workers, or IAM, which rejected the deal, were concerned over attendance policies and unscheduled days off if workers or family members get sick, an IAM union official said.

This labor agreement will certainly be watched closely by the Teamsters Union as well as by UPS as they negotiate a new labor agreement in 2023.  We do not expect those negotiations to be quick or painless for either party.

We’ll keep you posted on all the happenings, right here, in real time so be sure to check back.