Brief:
- UPS rolled out a series of rate increases of 4.9% that will begin to take effect in September 19, 2016 starting with Freight services. Rate increases are in line with past years as UPS continues to raise prices to upgrade its services.
- Daily rates for UPS U.S. Ground, Air, International and Air Freight between Canada and Puerto Rico will also increase by an average net 4.9% beginning December 26, 2016.
- The logistics provider also increased its rates for 11 surcharges, including lift gate at origin and destination, Saturday services, non-conforming freight, oversize and address corrections. Oversize pallet charges increased $3.50.
Insight:
The increases do not come as a surprise. In fact, it is part of an at-least-annual dance between dominant forces UPS and FedEx to increase general rates by near identical marginswhile modifying surcharges to differentiate the two delivery services.
The two companies’ shared dominance allows them to do this, particularly as ground delivery volumes have increased with the rise of e-commerce. However, the services may have reason to worry as Amazon and Walmart set the example for retailers to reach independence by acquiring their own fleets for freight transport.
Notably, UPS jumped the gun this year with its rate increase announcement, perhaps due to their expedited increase for freight transport. Although the company’s e-commerce shipping growth has increased profitability, the Wall Street Journal reports UPS is concerned by declining exports and a dip in B2B deliveries — suggesting the company may have increased freight rates to increase its cushion in this segment.
Source: Supply Chain Drain