Navigating UPS’s 2023 Rate Changes: A Detailed Look at New Fees and Surcharges
The 5.9% General Rate Increase (GRI)
Starting December 26, 2023, UPS will enact a 5.9% GRI. This will impact UPS’s Ground, Air, and International services. The GRI is not a flat rate increase across all services; rather, it is an average. Some services may see increases higher than 5.9%, while others may see less.
How Does GRI Affect Different Services?
1. **UPS Ground**: This is commonly used for domestic shipping. A 5.9% increase could mean significant additional costs for businesses that primarily use ground shipping.
2. **UPS Air**: This is generally more expensive than Ground and is used for time-sensitive shipments. With a 5.9% increase, businesses using this service will need to reevaluate the cost-to-speed ratio.
3. **UPS International**: For businesses that ship overseas, the 5.9% increase can add up quickly, especially considering the already high costs of international shipping.
Peak Season Surcharges
Peak season surcharges are set to increase starting from October 29, 2023, through January 13, 2024. These surcharges can range from $1.35 to $7.50 per package. The specific surcharge for each affected service depends on how much the customer’s average weekly volume exceeds a pre-defined “baseline” average weekly volume.
Criteria for Peak Season Surcharges
– **Ground Residential**: Applicable to home deliveries.
– **Air Residential**: Concerns air shipments to residential addresses.
– **SurePost**: A more economical service often used for less time-sensitive deliveries.
Additional Handling and Other Surcharges
UPS has also increased the surcharge for packages that are bulky or hard to handle under three categories:
1. **Additional Handling**: Expands from $3.50 to $6.90 per package from October 1 to January 13, 2024.
2. **Large Package**: Will jump to $74.90 in peak season, up from the typical $40.
3. **Over Maximum Limits**: Packages that exceed 150 pounds will now cost an extra $410. Interestingly, these packages typically don’t carry a fee, so this is a significant change.
Who Gets Affected?
Customers falling under one of three criteria will be subjected to these surcharges:
– Billed for more than 1,000 total packages in any week after February 2020.
– Billed for more than 10 combined large packages or packages requiring additional handling in any week after February 2020.
– Signed up for a new UPS account after December 31, 2020.
Implications for Businesses
1. **Cost Increase**: The new rates mean increased costs for businesses. This could force them to either pass these costs onto the consumer or absorb them, affecting profitability.
2. **Operational Reassessment**: High-volume shippers might consider operational changes like consolidating shipments or switching to alternative shipping options.
3. **Contract Negotiation**: Businesses may want to renegotiate contracts with UPS to mitigate some of the cost increases.
Understanding the specifics of UPS’s 2024 rate changes is crucial for businesses to budget accurately and make informed shipping decisions. With various types of surcharges and criteria that might apply, there’s a lot to keep track of. As both the GRI and surcharges are subject to change, staying abreast of UPS’s future announcements will be key for effective planning.