UPS FREIGHT ANNOUNCES SEPTEMBER GRI
We covered UPS GRI schedules in the past see our original UPS FREIGHT GENERAL RATE INCREASES THROUGH THE YEARS blog for a breakdown.
If you weren’t paying close attention to the latest announcement from UPS (United Parcel Services) you might have missed that UPS Freight LTL rates are going up. Most of the buzz around the supply chain world and even UPS itself has headlines announcing a 2017 GRI.
The freight side of UPS’s business often times flies under the radar of parcel, which UPS is known for first and foremost. In years past UPS made GRI announcements for freight and parcel at separate times if they occurred on separate dates or all at once only if the GRI took place on or around the same date for both business units. Now UPS is sliding in a freight increase early under the radar of parcel.
This strategy, is similar to how UPS has attempted to “bundle” pricing of freight and parcel. Where bottom lines savings are lost in translation of additional “incentives”.
Freight is a much more diverse marketplace for carriers, while the parcel carriers normally move lockstep in terms of pricing meaning an increase in freight volume for UPS doesn’t translate to any substantial savings for parcel and vice versa.
It’s also important to keep in mind that UPS operates several separate business units with separate P/L’s. Looking through UPS’s recent SEC filings large acquisitions last year seemed to bring down company profitability as a percentage of revenue. One of the main culprits analysts have pointed out is in UPS’s freight division which might be looking to close that gap under the radar of parcel announcements.
While ground parcel rates will go up after Christmas this year, UPS freight goes up in a few weeks. They will make further announcements around their increases in November but this month for many their LTL rates are going up. September 19th is all non- contract customers will have a 4.9% increase on average on their UPS freight rates. This matches last year’s GRI of 4.9% which went into effect Oct 26th 2015.
Some key things to consider when it comes to GRI’s
-They affect non contract customers which includes most small to mid size shippers
-Minimum charges and supplementals are usually the first things to go up (Freight and Parcel)
-The increase is an average across the board not what an individual company might realize. While the UPS
Freight GRI this year is 4.9% it is very possible some customers will realize a double digit increase in
-Fuel Surcharge is normally separate and is also fair game to be manipulated and increased (Freight and Parcel)
-In addition to a GRI UPS can also lower discounts on under-performing accounts which in turn will increase
What will be interesting to see is how quickly they roll out another GRI in 2017. This increase comes a full month and week earlier than last year’s increase of 4.9%. UPS Freight appears to be under additional pressure from its investors to improve profitability as volumes remain soft and inventories still relatively high.
For questions on GRI’s or for an analysis of your current LTL rates email firstname.lastname@example.org or call 717-626-1107×3