UPS 2021 Rate Increase
UPS has announced their expected General Rate Increase (GRI) a few weeks ago. What will this mean for you and how will this impact your company in 2021?
2020 has been an unprecedented year and the carriers have benefitted from these difficult circumstances. While some businesses are flourishing, others are trying to survive; the shipping cost increases could detrimentally affect a bottom line but, there are ways to mitigate these increases.
Since April, UPS has removed their guaranteed service refund. Prior to this change, if your package was delivered even 1 minute late, you could get a 100% reimbursement of the transportation charge. They added a peak season surcharge on Import and Export packages, as well as increases for customers shipping 25,000 packages or more per week. In addition, UPS will be charging peak season surcharges on packages requiring Additional Handling, Large Package and Over Maximum Limits from October 4 – January 16, 2021.
While their drivers are working extremely hard to get everything delivered daily, management has made sure to further increase their profits and off-set the cost to serve residential neighborhoods. Both UPS and FedEx are experiencing a record number of packages daily and profit. With commercial deliveries decreasing, residential deliveries have increased through the roof.
The 2021 rate increase will go into effect on December 27th. Tis the season once again for your annual rate increase. Many are not aware that there is room to negotiate these increases.
Here are some of the key changes that will impact your rates for 2021:
International shipping charges depend on multiple factors: the country of origin, the weight and the service level shipped. Using 3 of the main countries where the US Imports and Exports product; China, Mexico and Japan, the major increase falls on export packages. However, if UPS continues the trend of adding a peak season surcharge per pound into 2021, that more than offsets the minimal increase they have tacked on to Import packages for 2021.
Accessorial charges are seeing increases ranging from 4.8% to 9.5% and Additional Handling increases continue to go up. The carriers prefer small, dense commercial packages, which are the most profitable for them and are rejecting some larger packages that take up more space on the delivery truck.
To evaluate how these rate changes will impact your business, please e-mail Michaelmays@mindfullogistics.com for a free analysis. There are ways to mitigate these changes and make your business more profitable. Get ahead of the game and have a strategy before your rate increase goes into effect in only a few short weeks.