Small Parcel Shippers: Prepare for More UPS Rate Changes

 In Industry News

Small parcel shippers are readying themselves for their busiest time of year, and now must also prepare for further new and adjusted surcharges and fees from UPS. These types of adjustment have become common throughout the year, making it increasingly and frustratingly difficult for shippers to budget and to determine whether and how to recover the extra costs from customers.

Summary & significance of the latest changes:

First is a Fuel Surcharge increase that’s uncomplicated. Both Ground and Domestic Air Fuel surcharges are increasing by 0.25% across the board. This is a relatively small change, but it does again make UPS’s fuel surcharge slightly more expensive after the recent FedEx announcement which (briefly) created parity.

Less straightforward is a change in the Shipping Charge Correction (SCC) Audit Fee, which was put in place by UPS only a few months ago, on June 4, 2018. This charge is currently assessed when a shipper’s average SCC is more than $5. However, it’s uncommon for a shipper to have an SCC of greater than $5, and it seems to us that UPS has woken up to that fact, because, as of October 22, that average threshold will be dropped by 60% to $2. This makes it even more important for UPS shippers to manifest their packages correctly (dimension & weight) to avoid Shipping Charge Corrections and the Audit Fee. Our belief is that UPS expects this lower amount to generate the revenue it had hoped for from this fee.

Shippers who might hope that this fee will now make it a better deal to use FedEx should note that because the fee is dependent on whether the shipper accurately manifests the package, it does not necessarily create a competitive advantage for FedEx.

However, it does create more hassle for shippers’ internal reconciliations. The SCC is assessed by UPS on the back end generally after the package has been delivered, and often a week or more after the shipper was originally charged by UPS.  This could mean that shippers will have to absorb this cost because they didn’t charge their customer the correct fee at the time of shipping.

The details from the UPS website:

table of UPS rate changes 2018

Also note that these fees are in addition to the many Peak Season Surcharges that UPS has already announced. Find out more via this link: https://www.ups.com/assets/resources/media/en_US/peak-surcharge.pdf

If you would like to know how these fees may impact your shipping costs, contact us for a free analysis — here.

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