Every year transportation carriers increase their rates and call them a General Rate Increase (GRI). UPS and FedEx for decades now has designed these increases to secure additional revenues year over year.
Let's compare the increases across services, zones, weight groups and surcharges.
Announced Average Increase: 4.9%
Both carriers have matched the GRI percentage over the last few years, but experienced shippers and logistics professionals know that the announced averages and the actual increases differ significantly based on your company's shipping profile. Taking a closer look at where the increases occurred, we see that UPS and FedEx were nearly identical in where the highest increases were applied.
Services Comparison
The carrier were in what seemed complete synchrony when it came to each services' increase with an exception to the Sure Post and Smart Post options.
Weight Comparison
We found it interesting that FedEx and UPS are a cell-for-cell match for all zones (2-8) in the 1-10lbs weight break. Overall there is a very minimal difference in their rate cards.
Minimum Comparison
Shippers with national contracts know how important the zone 2, 1lb package cell is in a rate card. This is what the minimum net charge is based on. No matter how great your contractual discounts may be, the minimum charge determines what your effective discount is, particularly with low-weight, low-zone shipments.
Surcharge Comparison
UPS and FedEx took identical routes when increasing their surcharges this year.
The only notable difference to be found between the carriers is on residential surcharge. FedEx raised Additional Handling for packaging by more than UPS, but FedEx still sits at $1.25 less per occurrence than UPS.
FedEx New Charges
• Late Payment Fee: 6%
• Additional Handling Dimension Qualification - Measures greater than 105 inches in length + girth
• DAS Zip Code Changes:
UPS New Charges
• Zone-based pricing for Additional Handling and Oversize surcharges
-- details to be announced Apr 2021
• Additional Handling Dimension Qualification - Measures greater than 105 inches in length + girth.
• Ship to UPS Access Point Location: $2.99
• DAS Zip Code Changes:
In Summary
In a margin focused shipping universe, shippers are faced with very similar circumstances whether they ship with FedEx or UPS. Both carriers are specifically targeting low-weight, residential packages for the highest increases.
With the the threat of additional charges arising like FedEx’s indefinite peak surcharges or UPS’s 19 rate updates in 2020 (none of which were reductions), shippers have to be more vigilant than ever.
Leaning on the assistance of experts in this environment can massively influence the degree to which your transportation costs increase.
To learn more and be on the cutting edge of updates in the parcel industry, you can subscribe to our blog. To gain access to the tools, resources and rates that can help you counter the ever changing price and and combat the increases as much as possible, reach out to us!
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Source: Parcel Industry