UPS Quietly Announces 2020 General Rate Increase

Effective Dec. 29, 2019, UPS Ground, UPS Air and International services rates will increase by an average of 4.9%. Keep in mind that there's often a discrepancy between the announced increase and the effect the increase has on individual shippers.

Our team at Shipware will perform a detailed analysis of the announced increases over the next week, but in the interim, here are some areas which will likely provide the most impact:

1. Longer zone UPS Air services will see higher increases, while all ground zones will see similar increases. Shippers are more likely to utilize longer zones in the express networks, as the ground networks become more efficient in accommodating one- to two-day transit times in the lower zones. Therefore, it's likely that heavy UPS air shippers will face larger increases. The following is a comparison of Air to Ground:
   

   Credit: Shipware

2. Two- and three-day shipping have higher increases than other services. This will negatively affect shippers with day-definite (but not overnight) shipping needs.  Increases are consistent across weights for air services, but generally increase by weight for ground services.
   

   Credit: Shipware

   

   Full weight/zone breakdown of ground services increase. | Credit: Shipware

3. The ground minimum package charge (zone 2, 1-pound list rate) has increased by 4.84% to $8.23, which mirrors FedEx. Here is a full breakdown of minimum charge increases by service:
   

   Credit: Shipware

4. SurePost increases are much lower from one pound to nine pounds (2.2%) than at 10-plus pounds (5.3%). This will allow the UPS SurePost list rates to better compete with FedEx SmartPost list rates, although the SurePost rates remain higher by approximately 3% to 4% from one pound to nine pounds.
5. UPS has followed FedEx in placing a new emphasis on “Extended” Delivery Area Surcharges (DAS). ZIP codes designated as extended delivery areas will incur a much larger increase than their nonextended DAS counterparts. Refer to the table below for the full breakdown of the increases.

• Standard DAS increases range from 1.2% to 5.3%.
• Extended DAS increases range from 11.3% to 23.2%.
• Note that DAS/Extended DAS ZIP codes have changed. Refer to the changes here.

6. UPS has added new accessorial charges for 2020.

• A Rebill fee ($17) will be assessed for each request to change the billing account for a shipment.
• A Prohibited Item fee ($150) will apply to packages containing prohibited articles or restricted articles not in compliance with all UPS policies and procedures, and applicable laws and regulations if found in the UPS system.
• A processing fee ($10) will apply to each request to file a single entry under Entry Type 86 for a shipment that normally qualifies for U.S. customs clearance under a consolidated manifest.

This table shows assessorial increases for UPS’s most commonly assessed charges:

Credit: Shipware

Also, effective Dec. 29, 2019, new surcharge ratings will be enacted:

• Value-added services and other charges will apply to undeliverable packages returned to the shipper.
• UPS reserves the right to assess a late payment fee in an amount set forth in the UPS Tariff/Terms and Conditions of Service if an invoice isn't paid in full by the invoice due date.
• The weight threshold for applying an Additional Handling surcharge will be lowered from 70 pounds to 50 pounds actual weight for UPS Ground and UPS Air services.

How Will This Affect Individual Shippers?

The general rate increase will affect some shippers more than others. If you’re a shipper that routinely uses two- or three-day, long-zone express, or ships to remote areas, it's likely that you'll be subject to an increase much larger than the stated 4.9%.

As is the case with each annual rate increase, it's vital to understand how all changes combined will impact your company's overall shipping costs. However, understanding the financial impact to your organization isn't a simple or straightforward analysis. If you would like an in-depth understanding of how UPS’s 2020 rate increases will affect you, Shipware will perform a complimentary and customized analysis for your organization. Email inquiries@shipware.com to learn more.

Matt Bohn is a senior consultant, professional services at Shipware, LLC, where he works to optimize carrier contracts for high-volume shippers.