the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
Your Guide to the 2019 FedEx and UPS Rate Increases
12/17/2018 — Leah Palnik
FedEx and UPS rates will be going up in 2019, and it’s more important than ever that shippers know how to mitigate the impact to their business. In November, FedEx announced that its small package rates will increase an average of 4.9% as of January 7, 2019. In December, only a few weeks before the change is set to take place on the 26th, UPS announced the same average increase.
If you’re thinking that means you can budget your costs to go up by 4.9%, you are sorely mistaken. There is a lot to unpack with these rate increases. For starters, some services are increasing at a higher rate than others – meaning that depending on the services you commonly use, your costs could go up significantly more than the announced average.
Other factors determine how much more you will pay for your FedEx and UPS shipments in 2019. You will need to look at the new rates based on your package characteristics, as well as how far your shipments are being sent. Here are the released rates for 2019:
FedEx and UPS surcharges
The announced average increase only covers the base rates. You’ll also need to consider what fees and surcharges apply to your shipments. Many of these surcharges are increasing quite a bit. Here are the announced changes:
One surcharge to take note of is the Third-Party Billing fee. A couple years ago, UPS introduced this in response to the growing popularity of drop shipping. Right now if you use third-party billing, you will incur a charge of 2.5% of total cost. Beginning December 26, UPS will be increasing that charge to 4.5%. FedEx is leaving its Third-Party Billing charge unchanged at 2.5% for 2019. This is just one example of why it’s important to evaluate the changes that come out each year from UPS and FedEx. One small difference can have a huge impact on your costs.
The most costly surcharges continue to be those that apply to shipments that qualify as “Unauthorized” or “Over Maximum Limits.” If you send a package with UPS that weighs more than 150 lbs., exceeds 108 inches in length, or exceeds a total of 165 inches in length and girth combined, you’ll be looking at a $850 charge on top of your base rate. That same package will incur a $675 charge if you ship it with FedEx. Either way, you’ll be paying a huge premium to ship larger, bulkier packages.
Peak season strategies
It’s also important to note that ahead of the 2019 general rate increase (GRI), FedEx and UPS both announced peak season surcharges. For those larger packages, the carriers applied additional surcharges during the busiest time of year. A huge difference between the two, however, was an additional charge on residential shipments. UPS applied a $0.28 peak surcharge on residential ground shipments, while FedEx decided that for the second year in a row, it wouldn’t follow suit. If you’re a retailer that delivers a large amount of customer orders over the holidays, that charge can add up fast.
Trends in the small package industry
If you zoom out on all of these changes from FedEx and UPS, there are a few insights to glean.
- FedEx and UPS tend to institute similar pricing strategies. The carriers have a habit of matching each other when announcing average increases, and when one introduces a new charge or a different way to account for something, the other tends to do the same down the road. That doesn’t mean that it doesn’t matter which carrier you use. Instead, it’s important to stay on top of the changes and evaluate your options on a regular basis so you’re always using the service that works best for your budget.
- Many of the changes over the years have been put in place as a result of the ecommerce boom. With more shipments coming from online orders, comes more trends that strain the carriers’ networks. For example, ecommerce has led to more residential deliveries and more deliveries of oversized packages. That’s why you’ll see the carriers making changes that help them to recoup some of the costs associated with these trends.
- Both carriers have been making changes throughout the year, instead of just during the GRI. For example, FedEx and UPS both increased their Additional Handling surcharges ahead of the new year – in September and July respectively. When UPS first introduced peak surcharges for residential ground shipments, that was also done outside of the annual announcement. This just highlights how important it is for shippers to stay aware throughout the year.
We know you don’t want to comb through every tedious page of the 2019 FedEx and UPS service guides and compare them to your current rates. That’s why we did the leg work for you. In our free white paper, we break down where you’ll find the highest increases and explain some of the complicated changes you need to be aware of. If you’re looking for ways to offset the rate increases, we can also help with that. If you’re a member of one of the many associations we work with, you can get access to exclusive discounts. Contact us and we’ll find a way to help you save.
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FedEx and UPS Peak Season Surcharges: The Important Differences
08/09/2018 — Leah Palnik
FedEx recently announced that for the second year in a row, it won’t be applying a peak season surcharge on residential shipments. This is good news for retailers who expect a significant amount of e-commerce orders over the 2018 holiday season.
UPS, however, will be instituting a surcharge on residential ground shipments from November 18 through December 1 and then again from December 16 through December 22. UPS will be charging $0.28 per package for most residential shipments using ground services. For UPS air services the fees are as high as $0.99 per package.
UPS delivered around 700 million packages during the 2017 holiday season – a huge jump compared to the rest of the year. Ordering online has become so commonplace and easy for shoppers, and the carriers are feeling the effects. The increase in volume over the holidays drove UPS to introduce this new peak surcharge for the first time last year.
Typically UPS and FedEx have comparable rates and surcharges and will mimic each other’s changes, so this is a notable distinction between the two small package giants.
FedEx is sending a clear message to shippers. “FedEx delivers possibilities every day for millions of small- and medium-sized businesses,” said Raj Subramaniam, executive vice president and chief marketing and communications officer at FedEx Corp. “We are demonstrating our support for these loyal customers during this critical timeframe by not adding additional residential peak surcharges, except for situations where the shipments are oversized, unauthorized or necessitate additional handling.”
It’s important to note that both carriers are implementing charges on larger packages. With the rise of e-commerce, people are ordering items online that they would’ve exclusively purchased in-store in the past – including televisions and appliances. FedEx and UPS have made several adjustments to account for these trends, including a pushback on larger packages. Heavy and bulky packages don’t move through their automated systems and require more attention. FedEx and UPS are putting a price tag on that loss in efficiency and shippers need to stay aware.
FedEx will apply peak surcharges for larger packages from November 19 through December 24:
- $3.20 per package for shipments that necessitate additional handling
- $27.50 per package for shipments that qualify as oversize
- $150.00 per package for shipments that qualify as unauthorized
UPS will apply peak surcharges for larger packages from November 18 through December 22:
- $3.15 per package for shipments that necessitate additional handling
- $26.20 per package for shipments that qualify as large
- $165.00 per package for shipments that qualify as over maximum limits
If you’re not careful, the surcharges can add up fast. These peak surcharges are in addition to the already existing surcharges that apply to larger packages, and any others that may apply including delivery area and residential surcharges.
Retailers should take note of these peak season changes to ensure a profitable 2018 holiday season. If you see a significant amount of online orders over the holidays and ship with UPS, you’ll be paying an extra $0.28 per package, which will eat into your bottom line.
To prepare, take a look at what you shipped last year around the holidays and determine a forecast for this season. From there you’ll be able to see how much more you can expect to spend during the designated peak season. You may find that switching from UPS to FedEx for the busiest time of the year will provide you with a decent cost savings. Depending on the billable weight of your shipment and the destination, the base rate could be lower with FedEx – compounding the savings during peak season. It’s worth evaluating the options, when the holiday season can make or break your year.
There are many factors to consider when deciding how to ship your small package shipments. You need an expert on your side. ParterShip manages shipping programs for over 140 associations, providing exclusive discounts on small package shipments to their members. To find out if you qualify or to learn how you can ship smarter, contact us today.
FedEx and UPS rates will be going up after the holiday season! Make sure you know what to expect so you can mitigate the impact to your bottom line. Our free white paper breaks down where you'll find the highest increases and explain some of the complicated changes you need to be aware of.
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Your Guide to Proper Packaging
05/30/2018 — Leah PalnikProper packaging is a critical step in the shipping process. Just one mistake can expose your shipment to costly and time-consuming damages. Not only do you need to use quality materials, but you also need to package your products in a way that will increase strength and durability. Packaging is not a one-size-fits-all game, but it does start with some basic best practices.
Small Package Shipments
When picking a box for your products, you want one that is in good condition (no holes, rips, or dents) and is sized just right. There should be just enough space for the needed cushioning and no more. If you use a box that is excessively large you run the risk of being charged according to your dimensional (DIM) weight, which can get quite pricey.
How you cushion your contents will depend on the product you’re shipping. In general, you can protect the contents of your package with bubble wrap, foam cushioning, paper pad, or packing peanuts. This will help to prevent damages caused by movement and vibration that occur during transit.
Then it’s time to seal and label your package. Use packing tape rather than duct tape or masking tape, and seal your box using the H taping method. Remove any old labels from the box and place your label on the largest surface. Labeling is an important step for proper packaging, because it helps get your shipment to the right place without any unnecessary delays.
When deciding how to package your freight, consider the size and weight of your shipment and how it will be handled. What kind of protection will it need? Will it be on a dedicated truck or will it be moved on multiple vehicles?
Palletizing your freight will give it a solid base and will make movement on and off the truck easy and safe, making it a good choice for many different types of loads. Wooden pallets are the most common, and are typically recommended by carriers like FedEx and UPS Freight. However, you may consider metal, plastic, or corrugated pallets depending on what you’re shipping.
For the cartons on your pallets, make sure the contents inside are packaged properly with the needed impact protection and each carton is labeled with the shipper and consignee information. While stacking, you need to consider how it will affect the strength of your shipment. Start by placing heavier cartons on the bottom with lighter boxes at the top, and distribute the weight evenly. Use an aligned, column pattern while stacking and make sure there is no overhang.
Once your pallet is stacked, you’ll want to secure it with stretch-wrap and banding. The stretch-wrap should go around the cartons several times and be twisted every other rotation for increased durability. For banding, use sturdy steel, rayon, polypropylene, nylon, or polyester straps.
You may also want to consider crating if you’re shipping fragile freight. First, select a crate that is constructed from quality lumber. Most carriers will recommend plywood rather than oriented strand board (OSB), medium-density fiberboard (MDF), or particleboard. You also want to make sure your crate is sized appropriately, with excess space kept to a minimum.
Proper Packaging Is Key
Avoiding damaged freight and a claims nightmare starts with proper packaging. Along the way, you’ll also save yourself from costly DIM weight charges and increase the durability of your shipments. The time you spend up front to make sure you have proper packaging will be well worth it. Get in-depth instructions by downloading our free white paper – The Ultimate Guide to Packaging Your Shipments!
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The 2018 FedEx and UPS Rate Increases: A Closer Look
11/20/2017 — Leah Palnik
With the New Year approaching, it’s time to look at the UPS and FedEx rate increases for 2018 and how they will affect your costs. In September, FedEx announced an average increase of 4.9% on Express and Ground services. UPS joined the party in October, announcing that they will also be increasing their rates by an average of 4.9%. The new 2018 UPS rates will take effect on December 24, 2017, while FedEx will be instating them a week later on January 1, 2018.
The averages might be the same, but the rates vary. With higher increases for some services and lower increases for others, you can’t budget based on your costs increasing 4.9%. It’s important to look at what services you use, your package characteristics, and the locations you’re shipping to, and then evaluate the new rate charts to find your biggest cost offenders from the 2018 FedEx and UPS rate increases.
On top of the FedEx and UPS rate increases for 2018, there are additional updates that are likely to affect your shipping costs. First, UPS is lowering its dimensional (DIM) weight divisor from 166 to 139 for domestic packages less than or equal to one cubic foot (1,728 inches) in size. With this change, UPS and FedEx are back in line with each other on how they calculate dimensional weight. Both carriers will now use 139 for all domestic and international packages.
It’s been a wild ride the past few years with multiple changes to which packages DIM weight pricing applies to and how it’s calculated, so this is a welcome stabilization. However, a lower divisor means a higher chance that your package will get billed at your DIM weight, rather than your actual weight. If you ship packages one cubic foot or under with UPS, it’s important to take note and make changes to eliminate any unused space in your packaging or consolidate orders when possible.
Surcharges are also increasing, with some at alarming rates. Most notably, in 2018 FedEx and UPS are coming after larger, oversized packages. Not only are they increasing at a higher rate than most surcharges, they are by far the most costly. For example, the FedEx Unauthorized Packages fee is increasing from $115 to $300 and the UPS Over Maximum Limits charge is increasing from $150 to $500. The shipping trends that have resulted from the rise of e-commerce has taken its toll on the carriers and they’re having to move more and more oversized packages that can’t go through their automated systems. Time is money, so they’re tacking on hefty fees to make up for it.
Ahead of the new FedEx and UPS rate increases for 2018, new holiday peak season charges will also apply. UPS is adding peak surcharges on domestic residential packages during the busiest shipping days of the year – from November 19 to December 2 and from December 17 to December 23. These fees will add up quick when you have an increased amount of orders over the holidays.
In a notable departure from UPS, FedEx decided not to add a peak season surcharge this season. Instead they opted to increase surcharges for packages that are big or bulky enough to require special handling. UPS is also increasing the cost of larger packages by adding additional peak season surcharges on top of the already existing surcharges. The 2018 UPS rate announcement included increases for these surcharges for the next holiday season, so you can expect this trend to continue.
The 2018 FedEx and UPS rate increases are proof that the carriers are getting smarter, hitting shippers where it hurts most. Luckily, you don’t have to navigate the changes alone. The shipping experts at PartnerShip have evaluated the new rate charts and we have completed a detailed analysis, so it’s easier for you to assess the impact on your shipping costs. Download our free white paper today!
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FedEx Announces General Rate Increases for 2018
10/05/2017 — Leah Palnik
You may have heard that FedEx announced its General Rate Increases (GRI) for 2018. In the past few years, UPS has been the first of the two major small package carriers to make an announcement for the coming year, but this time FedEx is taking the lead.
Here are the announced average increases that will take effect January 1, 2018:
- 4.9% for FedEx Express domestic and international services
- 3.5% for FedEx One Rate
- 4.9% for FedEx Ground and FedEx Home Delivery
- 4.9% for FedEx Freight
As it’s important to remember every year, these averages don’t paint a complete picture. The zones you typically ship to and the services you typically use could dramatically affect the actual increase you’ll see on your invoices. Some are much higher than the average, while others are much lower or remain the same. UPS is likely to make its announcement for 2018 rates soon and if history is any indication, the averages will be similar to its competitor.
FedEx and UPS traditionally have similar average rate increases, but in the last few years their base rates have diverged a bit. Ground base rates used to be nearly identical, but in 2017 the two carriers took different increases in different zones, making it harder to compare apples-to-apples. On top of that, they also implemented slightly different approaches to dimensional (DIM) weight pricing, by using different DIM factors. As a result, looking at what would be most cost effective for you and how your rates will change has become more complicated.
Another trend that we’ve seen from UPS and FedEx is the announcements of additional changes throughout the year, separate from the GRIs. The announced averages have gone down in recent years, but these mid-year adjustments can sometimes have a larger impact.
One example of this is the new peak season surcharges that UPS is implementing for the holidays this year. UPS recently announced that it will apply a 27-cent charge on all ground residential packages during its busiest weeks in November and December. FedEx is taking a notably different approach and forgoing any additional holiday residential surcharges except for packages that are big or bulky enough to require special handling.
Both UPS and FedEx attribute charges like this to the rise of e-commerce, which has brought a sharp increase in residential shipments, particularly oversized items like furniture and exercise equipment. These kind of parcel shipments put a strain on their networks and their sorting machinery, and they've been finding ways to make up for these costs.
FedEx is also making a couple of additional moves to address the changing nature of parcel shipments in 2018. It will now apply a surcharge for shipments with third-party billing – mimicking a move that UPS made at the beginning of 2016. FedEx will also begin applying a DIM factor of 139 to all SmartPost parcels, effective January 22. UPS already applies DIM weight pricing to SurePost packages, but uses a higher DIM factor for packages 1,728 cubic inches and under.
Every year, when the new rates for UPS and FedEx are out, PartnerShip does a complete analysis so you can determine what effect it will have on your business. Subscribe to the PartnerShip Connection blog to be alerted when it’s out so you can start planning for the new year and learn how to mitigate the rising costs of small package shipping.
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UPS Adds Residential Holiday Shipping Surcharges; FedEx Will Not Follow
08/30/2017 — Jerry Spelic
The holidays are approaching and that means an increase in small package shipping. If you use UPS for residential Ground shipping, you’ll also see new holiday residential shipping surcharges from the Atlanta-based company.
UPS announced that it will add a 27-cent charge on all Ground residential packages sent between November 19 and December 2. This includes two of the busiest online shopping days of the year, Black Friday, which is November 24 and Cyber Monday, which is November 27.
The charge hibernates for two weeks, then returns December 17 through December 23, during which time all Ground residential deliveries will see the additional 27-cent charge, plus an additional 81-cent charge for next-day air shipments or an additional 97 cents for two-day or three-day delivery.
According to financial news outlet Bloomberg, the surcharges will increase the cost of UPS residential deliveries by roughly 3 percent.
The stated reason for the company’s surcharge increases is that online shopping and e-commerce has grown significantly over the last twenty years and UPS sees a huge influx of packages during the holiday shopping season that puts stress on its systems, processes and machinery. On an average day, UPS processes around 19 million packages but during the holiday season, that number swells to 30 million packages.
In order to meet demand, UPS says it has to add planes, trucks, and thousands of employees; and the surcharges are necessary to offset the additional cost of the holiday package surge.
“UPS’s peak season pricing positions the company to be appropriately compensated for the high value we provide at a time when the company must double daily delivery volume for six to seven consecutive weeks to meet customer demands,” according to Glenn Zaccara, a spokesperson for UPS.
UPS is also adding a Large Package surcharge of $24 and a Over Maximum Limit surcharge of $249. Both of these UPS surcharges are effective November 19 through December 23, 2017.
In a notable departure from UPS, FedEx will not apply residential surcharges this holiday season, except for packages that are big or bulky enough to require special handling.
Between November 20 and December 24, 2017, FedEx Express and FedEx Ground in the U.S. and Canada will increase the additional handling surcharge by $3 per package and $25 per package for oversize packages. The largest surcharge of $415 per package is only applied to packages that exceed the FedEx maximum size limit and cannot move through its sorting equipment.
With the additional handling surcharge for oversized packages, both UPS and FedEx are trying to discourage large and heavy, odd-sized shipments, because they cannot pass through its automated systems and require additional handling. In fact, the volume of oversized packages handled by FedEx Ground has increased 240 percent during the past ten years and is now 10 percent of the ground operation’s volume. This is “largely driven by expansion of e-commerce into sports equipment, furniture, mattresses and other things that weren’t largely available on e-commerce 10 years ago,” according to Patrick Fitzgerald, senior vice president of marketing at FedEx.
It's important to evaluate how you these changes might affect your shipping costs. Through a PartnerShip-managed shipping program, you can receive significant discounts on select FedEx services - resulting in savings that can help to offset cost increases like these. If you're not sure if you qualify for one of our small package shipping programs, contact us and we'll find the solution that's right for you.
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A Closer Look at DIM Weight Pricing
11/29/2016 — Leah Palnik
Dimensional (DIM) weight can be a tricky subject to master. All of the changes that small package carriers UPS and FedEx have made in recent years don’t help. In 2017, FedEx is lowering the DIM factor for domestic packages to 139 from 166. UPS is making the same change for domestic packages less than or equal to 1,728 cubic inches. So how will this change affect you?
First, it’s important to understand what dimensional weight is and how it’s calculated. Dimensional weight pricing is a common industry practice that sets the transportation price based on package volume, in relation to its actual weight. Carriers use dimensional weight in order to account for the space packages take up on their trucks and planes. This allows for a more precise way to charge for their services.
The basic formula for calculating DIM weight is (length x width x height)/DIM factor. For most small packages, the DIM factor will now be 139. The one exception is UPS domestic packages 1,728 cubic inches and under. UPS originally didn’t announce any changes to its DIM weight pricing for 2017, but it followed suit after FedEx announced it would be using 139 as the DIM factor for both domestic and international packages. Let that serve as a reminder to stay informed, as UPS and FedEx are continually making updates to their rates, surcharges, and DIM weight rules.
Once you calculate your DIM weight, compare it to your actual weight. The greater of the two will become the billable rate. When deciding if you need to make any adjustments to how you ship your packages in the upcoming year, start by doing an analysis of your common shipments. Look at those package measurements, calculate the cubic inches (length x width x height), and find the DIM weight to determine your billable weight. For an easy way to determine your billable weight, click here to use our DIM weight calculator.
UPS and FedEx base rates differ quite a bit more in 2017 than they have in the past. Because of this, you’ll want to make sure you’re not just using DIM weight pricing to determine which carrier to use. Download our free white paper, Understanding the 2017 Small Package Rate Increases, for a detailed analysis on the new rates.
Since density is the name of the game, make sure you review your shipment packaging to reduce the size of your package if you can. Don’t use oversized boxes that contain unused space and, where possible, consolidate orders. By being more efficient with your packaging, you’ll ensure you’re not paying to ship empty space.
One of the best ways to offset the rate increases and DIM weight pricing changes is to ensure you’re maximizing any discounts available to you. PartnerShip offers association members discounts on select FedEx services. If you're not sure if you qualify for one of our small package shipping programs contact us and we'll find the solution that's right for you.
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Understanding the UPS and FedEx Rate Increases
11/11/2016 — Leah Palnik
Every year small package carriers FedEx and UPS evaluate their shipping rates and make adjustments that can have a substantial effect on you and your business. The UPS rate increases take effect on December 26, 2016, while the new FedEx rates take effect on January 2, 2017. As always, how much more expensive your particular small package shipments will be in the new year depends on many factors, including shipment volumes, sizes, weights, and modes.
Here are some quick facts:
- FedEx Express and International rates are increasing an average of 3.9%
- UPS Air and International rates are increasing an average of 4.9%
- FedEx Ground and Home Delivery® rates are increasing an average of 4.9%
- UPS Ground rates are increasing an average of 4.9%
- The dimensional divisor for FedEx domestic packages is changing from 166 to 139
- UPDATE: the dimensional divisor for UPS domestic packages greater than 1,728 cubic inches is changing from 166 to 139
- FedEx SmartPost®, FedEx One Rate®, and UPS SurePost® rates will be changing
The important takeaway when thinking about your shipping expenses in 2017 is that the announced average increases paint an inaccurate picture of the true impact these new rates could have on your business. The shipping experts at PartnerShip® have dug into the details and analyzed the new rate tables to assess the true impact to shippers and help you make sense of these changes. Learn more about how the 2017 rate increases will affect your shipping costs by downloading our free white paper!
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Get winning! Enter the FedEx Advantage® $25,000 Get Ready Sweepstakes
10/13/2016 — Leah Palnik
Get ready for a chance to win! FedEx is giving PartnerShip customers a chance to win up to $10,000, or over 100 other prizes, in the $25,000 Get Ready Sweepstakes. By enrolling in a PartnerShip-managed shipping program, association members will be automatically entered in the sweepstakes. If you are already enrolled in one of our programs, you simply have to join My FedEx Rewards. Then you’ll have a chance to earn up to 51 additional entries.*
Imagine how you could invest in the success of your business with these prizes:
- $10,000 Grand Prize (1)
- $1,000 First Prizes (10)
- $50 Second Prizes (100)
Get started. Keep saving.
PartnerShip customers enjoy significant savings on select FedEx® services. The program is free to join and there are no minimum shipping requirements. What’s more, you may be eligible for other special offers and promotions.
PartnerShip works with over 120 major trade associations, across many industries, to provide their members with time- and money-saving tools to help them be successful in all facets of shipping and logistics. If you belong to an association we work with, take advantage of our free shipping benefits today and get in on the $25,000 Get Ready Sweepstakes. If you're not sure if you qualify for one of our association shipping programs contact us and we'll find the solution that's right for you.
*Limit 52 total entries. NO PURCHASE NECESSARY. Void where prohibited. The $25,000 Get Ready Sweepstakes is sponsored by FedEx Corporate Services, Inc. Open to legal residents of the 50 United States and Washington, D.C., age 18 or older who are members of an eligible FedEx Advantage affiliate as of 9/11/16. Begins 9/12/16; ends 11/4/16. For rules, go to smallbusiness.fedex.com/get-ready-rules.
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FedEx and UPS Announce 2017 Rate Increases
09/26/2016 — Leah Palnik