The Latest on 2018 Carrier Rates

For most brands, the dust has finally settled on yet another busy peak holiday season.

Annual rate increases and changes are now in effect for most carriers including FedEx, UPS and USPS – and as ecommerce transactions continue to skyrocket, these carriers and others will undoubtedly continue to announce changes each year.

For now, here’s a recap of what you need to know.

New 2018 FedEx pricing is now in effect. The first round went into effect January 1 and additional changes to surcharges and fees took place January 22.

This year, the average rate increase for both ground and air was 4.9%. This increase is consistent with FedEx’s other annual general rate increases (GRI) over the past four years. For 2018, there were lower increases on shorter zones, and lower increases on Overnight service relative to 2-day and 3-day service.

A big change – dimensional weight pricing has been added for all SmartPost shipments that weigh over a pound. The dimensional weight formula is the same as FedEx Ground and FedEx Express shipments (dimensional weight – L x W x H / 139).

The additional surcharges and fees that went in effect January 22 include Additional Handling, Oversize, Ground Unauthorized Surcharges and Third Party Billing Surcharge.

This is the first year for a Third Party Billing Surcharge from FedEx (UPS rolled theirs out in 2016). FedEx will charge 2.5% of the total charges (excluding duties and taxes) for all services including Express, Ground, SmartPost and International. You can see the definition of a Bill Third Party shipment in the FedEx Service Guide.

Additional information is available at the FedEx website.

UPS increased their rates the day before Christmas. Rates increased 4.9% on average for UPS Ground Services, UPS Air and International services.

A Large Package Surcharge of $80 will apply to any U.S. Domestic package with a length exceeding 96 inches or a length plus girth greater than 130 inches.

The dimensional weight divisor for packages less than or equal to one cubic foot in size is 139 for all U.S. Domestic services subject to Daily Rates or Alaska and Hawaii Rates.

UPS has already announced more changes that will go into effect July 8:

The Large Package Surcharge for any U.S. Domestic package delivered to a residential address will increase to $90.

Any U.S. domestic package exceeding 70 pounds in actual weight will bring the Additional Handling Fee up to $19.00 (from the current $12.00).

UPS has already announced 2018 peak size-related charges:

From November 18 through December 22, the Large Package Surcharge will increase an additional $26.20 per package.

During the same November-December period, all Additional Handling fees will increase by $3.15 per package.

Additional information is available at the UPS website.

USPS rolled out their 2018 pricing on January 21. There was an average increase of 3.9% across all services – First Class, Priority Mail and Priority Mail Express. This increase is in line with increases in previous years.

Additional information is available at the USPS website.

The trucking industry has faced some bumpy roads in recent years, and this year is no exception. HUB International, a top North American insurance brokerage firm that serves several industries including the trucking industry, says that trends including a driver shortage, the implementation of the Electronic Logging Device (ELD) and increased demand for last-mile deliveries is causing LTL rates to rise.

It’s more important than ever to have the best possible shipping model in place for your business. Consider these questions:

• Are you carefully analyzing your shipping spend?
• Are you monitoring your carriers’ delivery performance?
• Are you rate shopping each order?
• Can you eliminate some of your packaging space?
• Have you looked at a centralized location for your orders to originate from?

Have you negotiated a revised DIM Factor of discount based on your carrier spend?

PFC can help you manage these and other important action items. We’re diligent in understanding your outbound order configuration to ensure the most appropriate model is in place based on your business goals and consumer expectations. Contact PFC if you’d like to learn more about our free shipping analysis.

At PFC, our clients’ success is our number one priority. Since 1974, PFC has delivered outstanding quantifiable results, with turnkey solutions in fulfillment and contact center services – all backed by leading technology. Brands that partner with PFC have historically achieved considerable cost savings in excess of 35% and have significantly improved their program ROI. Want to learn more? Email us at info@pfcfulfills.com or call us at 800-493-7063.

Sources:
https://www.hubinternational.com/blog/2017/11/commercial-trucking-industry-trends/

http://issuu.com/rbpublishing/docs/par_janfeb_964f9e56764883?e=2333928/57866389