Hidden Parcel Rate Hikes: What You Don’t Know Could Be Costing You

As seen in Parcel Media, By @timothy-binkis

Parcel carriers are increasing rates and implementing rule changes at a pace so rapid that many shippers are failing to notice. This should be a concern for everyone in the shipping community, especially given the lack of communication from carriers when these changes occur.

While some rate increases, like the widely discussed Fuel Surcharge hikes from both UPS and FedEx, get attention, many other significant changes happen quietly. These unannounced updates, such as those recently introduced by UPS, can lead to considerable financial impact if not properly accounted for. Although these adjustments may seem small at first glance, ignoring them could result in continued profit erosion.

Here are the key changes from UPS, effective August 18, 2024, that all shippers should be aware of:

• Address Correction Fee: Increased from $21.00 to $22.00. This fee is assessed when a shipper provides incorrect address information.
• Chargeback Fee: Increased from $21.00 to $22.00. This charge is applied when a consignee or third party refuses to pay for a collect or third-party billed shipment.
• Missing PLD Fee: Increased from $3.85 to $4.40. Shippers who fail to provide the required Package Level Detail will see this increased fee on their bills.
• Shipping Charge Correction Audit Fee: This fee has undergone the most significant change. Previously, it was applied when shipping charge corrections (for things like incorrect weights, dimensions, etc.) exceeded $2.00 per package. The threshold has now been lowered to $1.00 per package, meaning more shippers will be affected. Additionally, the audit fee itself has increased from $1.25 to $1.65 per package, or 8% of the total correction amount, whichever is greater.

The Shipping Charge Correction Audit Fee is particularly alarming. For shippers who already experience audit fees, the increase could be over 30%, significantly impacting their overall shipping costs. More concerning, however, is that many shippers who had previously avoided these fees may now start seeing them due to the lowered threshold. This change alone could result in unexpected cost increases, especially for high-volume shippers.

While these rate changes may seem minor when viewed individually, their cumulative effect can be highly detrimental. Carriers are finding increasingly creative ways to raise profits, often through quiet rule changes like these. If shippers don’t pay close attention, they may find their profit margins slowly chipped away by unaccounted costs.

As Carriers continue to get more and more creative in their efforts to increase profits, Shippers need to ensure that they have ways to understand the impact of rate and rule changes in order to protect themselves.
There is nothing worse than having unknown and unquantified Rate increases chipping away at your profit margins!