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UPS and FedEx Announce 2020 Rate Hikes

The new FedEx and UPS rate hikes for 2020 are a lot to process but worth the effort to understand and project their impact. Of course, some changes will affect certain types of shippers more than others, but Logistyx has you covered when it comes to understanding what to expect and how to take action.

Lean on procurement services

Logistyx’s procurement features allow customers to estimate what some of these changes will cost them before they take effect. Knowing ahead of time supports contract negotiations with the big parcel carriers, and it means they’ll have a chance to prepare by adjusting business rules, repackaging goods or taking other steps.

get the ebook: critical capabilities of a tms for parcel shippingFor example, one set of rate increases relates to two- and three-day air delivery. Fees for deliveries traveling greater distances (to zones 7 or 8) will increase by, in some instances, more than twice as much as deliveries traveling lesser distances (to zones 2 or 3).

In other words, if you regularly ship goods over long distances, UPS two- and three-day air likely won’t be as great of options going forward. It might even warrant adding another U.S. distribution center or incorporating retail stores as nodes in a distribution network. Shippers can also choose to start moving packages differently by outsourcing to 3PL (third-party logistics provider) warehouses, zone skipping or transporting goods to carrier depots closer to customers.

Stay diligent when it comes to fees

Our auditing function helps you to analyze fees and determine how to avoid them. The tool helps shippers monitor cost impacts that could take them by surprise, including:

  • Reducing the weight threshold for its additional handling surcharge from 70 to 50 pounds on UPS Ground and UPS Air services: if you routinely ship heavier products in the 50-70-pound range, this could be a game-changer.
  • A prohibited item fee will apply to packages containing prohibited or restricted articles not in full compliance: shipping lithium batteries, dry ice and more requires special labeling and non-compliant shippers will pay greater fines in 2020.
  • FedEx Express and Ground will average a 4.9% increase.

Concerned about rising carrier rates and how to mitigate them?

Contact us for a complimentary assessment.