UPS Announces 2020 Rate Increase

 

UPS 2020 Shipping Rates Increase by 4.9%

UPS announced its 2020 general rate increase (GRI) on November 18, 2019. The announced rate increase is 4.9 percent on Ground and Air services, and it will go into effect on December 29, 2019. Along with the increases on the transportation charges, most accessorials will go up, some new accessorials will be added, and the DAS and EAS ZIP Code list will change.

Rate Change Breakdown

Ground rates go up 4.9 percent on average, and they will be identical to FedEx Ground rates for the one to 10-pound range, except for Zone 3, one-pound SurePost rates, which increase 2.2 percent for the one to nine-pound range. SurePost rates for less than a pound packages increase at 0.9 percent. Next Day and Next Day Saver rates go up at 5.2 percent. 2-Day and 3-Day services increase at 5.8 percent and 5.9 percent, respectively. One interesting contrast to the previous GRIs is that the minimums (zone 2, one pound) increase at a lower rate, ranging from 3.9 percent to 4.9 percent.

 

2020 UPS domestic services rate increase                Table 1: 2020 UPS rate increases for domestic services.

UPS Ground vs UPS Air 2020 Rate Increases

The rates for Air services increase at a higher rate for the high zones, while the increase on Ground is more uniform across the zones.

UPS 2020 rate increases by service and zone                 Table 2: UPS rate increases by service and zone (under 100 lbs.)

UPS vs FedEx 2020 Rate Increase

In 2020, UPS rates will be almost identical to FedEx for the Ground service. For Next Day, Next Day Saver, 2 Day AM, and 2 Day services, UPS will be slightly more expensive. For 3 Day service, even after the significant rate increase, UPS is almost 16 percent cheaper than FedEx. For SurePost, UPS is 3.5 percent more expensive in the one- to nine-pound range, which is the target weight range for SurePost/SmartPost.

UPS vs FedEx 2020 rates                Table 3: UPS 2020 rates compared to FedEx 2020 rates. Positive number means UPS is more                              expensive

UPS and FedEx Convergence

With 2020, we see that UPS is following FedEx in some key areas. One significant convergence is the Large Package (Oversize) and Over Maximum Limits (Ground Unauthorized) charges. While these charges were significantly different in 2019, in 2020 they will be identical. Large Package Surcharge will be $100 for commercial and $120 for residential deliveries. Over Maximum Limits charge will be $875 per package.

Additional Handling charges go up 4.3 percent (weight) and 5.3 percent (dimension) for UPS in 2020. However, a significant change for 2020 comes for Additional Handling (weight). This surcharge currently applies to packages over 70 pounds. However, in 2020, packages over 50 pounds (actual weight) will receive the $24 charge. FedEx had announced the same change in conjunction with its GRI announcement earlier this year.

Large and heavy package related accessorials                          Table 4: Large and heavy package related accessorials

Change in DAS and EAS Zip Code List

Another key change is the updated 2020 list of DAS (Delivery Area Surcharge)/Extended DAS ZIP Codes. FedEx previously announced that they would add close to 2,000 ZIP Codes to the list in 2020 and shift some of the existing ZIP Codes between DAS and EAS. UPS announced an almost identical list, where 24,600 of 24,628 ZIP Codes are identical to FedEx.

The ZIP Codes aren’t the only thing where carriers moved in unison. The DAS/EAS rates, which differed between the carriers in 2019, will be identical in 2020 as well, resulting in a dual increase. Both the volume of DAS/ EDAS packages will increase, and these packages will be charged the increased fees (especially commercial deliveries to Extended DAS ZIP Codes, which will see an increase of 22-23 percent).

Delivery Area and Extended Delivery Area Surcharges                    Table 5: Delivery Area and Extended Delivery Area Surcharges

Accessorials and Surcharges Increase

Other significant accessorials will increase as well, and most of them remain in line with FedEx rates. The most significant delta is on the residential surcharges, where UPS is slightly more expensive.

Rate changes for the common surcharges                           Table 6: Rate changes for the common surcharges

In 2020, UPS is introducing three new surcharges and dropping one. The Prohibited Item Fee, which is a $150 charge, will apply to packages that contain contents that are prohibited by the service guide. Any package that gets the billing account changed will incur a Rebill Fee of $17.00. An Entry Type 86 Processing fee of $10.00 will apply to each request to file a single entry for a shipment that normally qualifies for consolidated customs clearance. In a move obviously intended to increase adoption of UPS’ Access Point network, UPS is eliminating the $1.50 Access Point delivery charge in 2020.

Understand How Rate Increases Impact Your Costs

Overall, we are seeing UPS match FedEx’s rates in many areas. However, there are still significant differences between the two carriers. The 2020 GRI will continue the trend of large/heavy packages taking large increases, primarily through veiled surcharges. Shippers who ship packages over 50 pounds will be particularly impacted by Additional Handling charges.

The announced increase of 4.9 percent rarely tells the real story of the cost impact to the shipper’s spend, and a detailed transportation analysis is required to get a full picture with the higher increases to the higher zones, rule changes, and updated DAS/EAS ZIP Codes.

Learn more about how enVista can help you navigate these changes with our Transportation Services.

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Baris Tasdelen is Senior Transportation Analyst at enVista, where he focuses on negotiating parcel carrier contracts, analyzing parcel data for operational optimizations, and building and running cost models for parcel and other transportation modes. He can be reached at btasdelen@envistacorp.com

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