UPS and FedEx General Rate Increases

December 24, 2009 · by Nate Gilmore

FedEx and UPS are going to do their annual rate increase in January 2010, here is a bit of a guide to what's changing. The USPS went through a rate increase in Q2'09 and may not be increasing rates on their dominant products early in 2010. With USPS's finances in a bit of a mess lately, I wouldn't rule out a 2010 price change for USPS right yet though.

UPS and FedEx are doing one of their largest rate hikes ever though.

UPS 2010 Rate Increase

The UPS Average Rate Increase is going to be about 4.9%. UPS Air and International Services will increase a net 4.9% through a combination of a 6.9% increase in the base rates, "offset" by a 2% reduction in the fuel surcharge.

Shippers of light weight packages will see a 5.9% increase. Average increase is calculated on base rates only. Surcharges are also going up, sometimes in a very big way.

The big hit for 2009 is the Address Correction surcharges. Address Correction Air goes from $10.00 to $11.00, Ground increases from $8.00 to $10.00. That is a heavy 25% increase for getting an address wrong.

Here are some of the other surcharge increases for UPS:

Extended Area Surcharge Export & Import increases $2.00 to $24.00, or $0.24 per pound whichever is greater
Residential Surcharges increase $0.10 for Air to $2.50 and $0.15 for Ground to $2.20.
Large Package Surcharge is up $5.00 (now it's $50.00.)
Delivery Area Surcharges: o Commercial $1.60 will now be $1.70 o Residential $2.40 will now be $2.50 o Extended Commercial $1.60 will now be $1.70 o Extended Residential $2.65 will now be $2.75

Fedex Rate Increase

Here is the Fedex post on their 2010 increases and Parcel Industry's PDF comparing Fedex rates to last year (nice!) FedEx Express package and freight rates will increase 5.9%. They will again be partially offsetting the increase by adjusting the fuel surcharge calculation.

Caveat. As with any type of industry wide rate changes, you should take a look at your own business shipping to really understand the impact.

Freight Rates are also going up UPS Freight and FedEx Freight, will also increase their rates in January, 2010.

Tips to Deal with the Post Rate Increase

If you are a regular reader of the Shipwire Shipping Fulfillment news blog, you'll be well aware that UPS and Fedex increase rates the same way every year. There is 4-7% increase in rates, that is offset by a fuel surcharge reduction (usually 2-3%). Sometimes later in the year the fuel surcharge is brought back up. It's interesting that the increases often look the same and happen at the same time. Here is this year's carrier rate increase post of rants and tips.

One way to deal with the carrier rate increase is to use FedEx and UPS less. You may use them for the same number of shipments, just make sure that you are shipping products the shortest distance possible. Especially your best sellers. I'm a consistent advocate of storing best sellers closer to buyers. Here is a shipping rate calculator to figure out how much an optimized supply chain can save you.

Make sure you don't ship products to the wrong address. Use address verification software for online postage printing. Another blogger, The Shipping Coach, has some tips for leverage address verification software to make sure you don't get hit by address correction charges.

Automate your shipping rates into your shopping cart. Most of the carriers have API's and you can see links to Shipwire's shipping rate API below. Automating your rates ensures that you are always quoting the most up-to-date rates to your merchants. If you have not automated your shipping rates and instead use rate tables on your shopping cart, do yourself a favor...check them.

Nate Gilmore | Shipwire product fulfillment with warehouses in the U.S., Canada and the U.K. | Shipping Rate API for USPS FedEx UPS rates

This post is filed under Tools, Tips and Suggestions and has the following keyword tags: UPS Shipping rates, Fedex Shipping rates, USPS shipping rates.