“A small leak will sink a great ship” is a quote attributed to Benjamin Franklin. The quote suggests that even small leaks can eventually cause a ship to sink, no matter how large it is. In a blog that we released about two weeks ago, we described how small, undetected carrier rate increases could lead to serious “Profit Leaks”, which could actually sink a company!
Our blog detailed the impact of UPS Zonal changes that went into effect on June 17th. The announcements surrounding these changes from UPS were very subtle, and provided zero insight related to the specific changes that were to take place. Unfortunately, this appears to be a new trend in the parcel world.
Hidden Rate Increases
Now in less than a month since the last inconspicuous rate increase, UPS is sneaking in yet another one; this time with their Ground and SurePost Fuel Surcharges. The only announcement that we could find related to this change was buried on their website. We could not find any press releases, or outside announcements related to this change (outside of those provided by some other Parcel consultants.)
Basically, the change is being made to the table that is used to determine the weekly FSC for the services previously listed. The change will result in an increase in FSC of .50%. A similar change was made back in April that also increased the FSC by .50%. Although these increases might be considered small in some respects, it is important to consider all of the other changes and increases that the main Parcel carriers have made this year.
Challenges for Shippers
Since the General Rate increases that went into effect at the beginning of the year, the carriers have snuck in an increase to the number of Zip codes that are subject to Delivery Area Surcharges, increased zones for certain Zonal pairs, and have increased their Fuel Surcharges.
As if it wasn’t hard enough to determine the impact of, and keep track of the General Rate Increases put in place back at the beginning of the year, now there is the need to try to account for the ones that are BARELY announced, and the lack of specific details!
As described in our last blog, these increases that seem to fly under the radar can cause ongoing “Profit Leaks”, and hurt a shipper’s profit margins. There is no need to belabor that point here. However, when the leaks continue to grow, it is imperative to take action!
Forecasting Future Increases
At the rate this is happening, how long will it be before these midyear, under communicated rate/rule changes will eclipse the GRI amounts that the carriers announce??? Who knows, there could be some shippers that have already experienced this due to their unique shipping characteristics!
Given the frequency and speed in which these surprise increases are occurring, one can only expect to see more before the end of the year. At the end of the day, it is becoming increasingly difficult, if not impossible for shippers to budget for Parcel Rate increases. So it is imperative to have a solid view of their shipping activity, along with a strategy to help offset increases when they happen.
Reach out to ICC Logistics today to find out how our enhanced data analytics, long term experience and unique insight can easily help you avoid a Titanic-like disaster!
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