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On December 26th, UPS shippers will feel the impact of the 2024 general rate increase average of 5.9% on their small parcel expense. Although this represents a slight improvement compared to last year’s unprecedented increase of 6.9%, shippers are realizing the actual impact on their individual shipping profiles will more than likely surpass the stated 5.9% figure. WHY? Because the annual GRI can never be a one size fits all increase for shippers. And don’t forget, the stated 5.9% increase is exclusive to transportation charges only, and never includes any of the substantial accessorial surcharge increases, which also rise annually. Given the mounting expenses in today’s high inflation market, shippers must now weigh the nature of the rate increase and its implications, and subsequently explore potential strategies to alleviate the burden of these escalating costs.
The Carrier’s annual general rate increase calculation is based on an average of all services, resulting in varying percentage increases. Ground services will see a 6.1% weighted average increase, while air services range from 5.6% for Next Day Air Early AM to 7.1% for 2 Day Air. International shipments will experience the highest increase of 10.8% with Worldwide Express Export, while Standard Import from Canada will have the lowest average increase at 3.3%.
Each of the these averages can provide a general understanding of the overall increase, however, it is important to consider the specifics of your shipping profile, destinations, and service levels, as they will significantly impact the overall increase in overall spend. Shown below, ground shippers will experience a higher increase in higher zones: comparatively Zone 2 at 5.68% to Zone 8 at 6.60%.
Another significant factor that affects the growth of your individual increase is the infamous minimum charge. In the case of domestic shipments, the minimum charge is determined by the zone 2, 1 pound list rate. When UPS applies your negotiated discount, they will make adjustments to the list rates in order to meet the minimum charge requirement. Shippers with lower weights and less favorable minimum reductions may find it difficult to achieve their full discount. Increases in this area can be seen as high as $2.96, 8% on Next Day Air Packages. Gound Commercial & Residental will incur a $0.60, 6% increase for 2024.
Furthermore, UPS has recently implemented a language transition, from currently referring to “Peak/Demand Surcharges” to the more concise term “Demand Surcharges”. The specific ramifications of this alteration for individual shippers are currently indeterminate; nevertheless, it implies that the Carrier intends to impose these charges outside the customary “Peak Season” timeframe.
With regards to International Shipping, a charge of up to $5.00 per shipment will be imposed on the shipper if they fail to provide the commercial invoice in digital format using UPS Paperless Invoice services prior to UPS processing the invoice. Formally, shippers were obligated to include a printed commercial invoice with their international shipments. This document serves as an additional label used by customs to determine taxes and ensure compliance with shipping regulations. UPS has long offered a service called UPS Paperless Invoice, which digitizes this secondary document. The newly introduced fee will be applicable when the shipper opts not to utilize the UPS Paperless option.
The “Shipping Charge Correction Audit Fee,” which has remained at $1.00 for some time now faces a $0.25 increase to $1.25. Although this may seem like a nominal increase, it is important to note that these fees can certainly add up and be avoided through the implementation of best practices and diligent monitoring. The calculation of these fees is based on the account number and the shipping charge corrections billed to that account during the relevant invoice period.
Another significant increase in avoidable costs is Address Corrections, which experienced an 8% rise from $19.50 to $21.00 per occurrence. Consequently, more shippers are exploring the use of external tools and reports to efficiently mitigate these charges.
Shippers are also continually confronted with the ongoing increases for large, heavy, and bulky packages that Carriers don’t want in their network. More and more shippers are seeking outside sources to conduct a comprehensive Carrier Agreement analysis which can help minimize the impact of these charges.
In conclusion, it is crucial for shippers to examine and understand the true impact of the 2024 rate increase upon their unique shipping profile, remain vigilant with regards to cost-savings analyses, and always consider opportunities for renegotiating their Carrier Agreements.