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Breaking Down FedEx and UPS’ 2017 Rate Increases

Posted by Rachel Carollo on Dec 7, 2016 10:27:20 AM

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UPS and Fedex both recently announced their annual rate increases for 2017. And with so many different services, add-ons, and surcharges attributed to each company, it can be confusing to determine what the increases mean for you. So confusing, in fact, that Rob Martinez of Shipware, LLC and Krish Iyer from Neopost recently conducted a webinar to explain what you need to know about the new rate changes and how you can mitigate the impact.

While Fedex announced an average 3.9% increase and UPS a 4.9% increase, you really need to dig into the details to determine exactly how they will affect your business. Depending on which service you choose and what zone you are in, rates can vary dramatically from the average. For Fedex, certain zones increased by 7%. For UPS, certain services like Next Day Air and UPS Ground increased by 6.5% and 6.9% respectively.

Additionally, both companies are increasing surcharges on things like handling, address correction, hazardous and dangerous material shipping, rerouting, adult signature requirements, and more. According to the webinar, overall, Fedex has a steeper increase on surcharges than UPS.

Additionally, Fedex is lowering their dimensional weight (the amount of space a package occupies in relation to its actual weight) divisor to from 166” to 139” in 2017, causing Fedex to be overall more expensive than its competitors. The chart below shows example pricing based off weight vs. dimensional weight.

 

Sneakers

Backpack

Toy Truck

Toaster

Price by Weight

$8.05

$7.17

$7.17

$7.17

Price by Dimension

$9.11

$9.11

$9.47

$9.66

% Change in Price

15%

27%

32%

35%

To mitigate the risk of significant price increases, the webinar recommends understanding exactly what services, in what areas are experiencing increases. Benchmark these changes against your needs to get an accurate view of the unique impact for your business.  

But there’s another solution. For local and regional deliveries, forgo the hassle of trying to understand the complications of FedEx and UPS’ rate increases and instead opt for same-day delivery by Dropoff. Our pricing is simple and upfront so you always know exactly what you’re paying for. Our driver Agents are professional and uniformed and our dedicated customer service team is there for you when you need them. This holiday season and beyond, let Dropoff be your reliable and trusted same-day delivery partner.

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Topics: Logistics Industry