UPS and FedEx 2020 Rate Increases: Let's Look at the Damage

Author: Tan Nguyen
December 30, 2019

UPS and FedEx 2020 rate increases were recently announced. And as in years prior, it's an average 4.9% rate increase across the board. That's for the service level rates themselves.

If you look at the UPS and FedEx 2020 rate increases, however, you'll see a different impact that you may not be so happy about.

Most surcharges have gone up about 3 1/2 to 4%. But some of them, including the size and weight-related surcharges, have gone up anywhere from 15 to 20%. This is depending on the carrier themselves.

With your carrier, you want to make sure that you understand the impact of not only the rate increase itself. That rate increase could be around 4.9%.

When you take into account the surcharge increases, there's a whole different impact. It could be anywhere from 10 to 15% on an increase that you weren't expecting.

Double the Surcharge

There are two surcharges that both carriers are taking it to the customers with:

1. Delivery Area Surcharge

Both carriers have added 500+ ZIP Codes, under which they're going to assess that surcharge. As for UPS, the commercial extended delivery surcharge increase alone is about 20%. You want to make sure you understand the ZIP Codes. As well as the impact of that rate increase itself that applies to that surcharge.

2. Additional Handling

These carriers are increasing additional handling weight-related surcharges to $24. Both are also reducing the threshold under which that surcharge becomes applied. It's currently 70 pounds plus.

So if you have a package that's over 70 pounds, you'll get hit with the additional handling surcharge. For 2020, that threshold is dropping to 50 pounds. So if you have a package that's 50+ pounds, you'll receive an additional handling surcharge.

How These UPS and FedEx 2020 Rate Increases Impact You

We've already done an impact analysis for some customers. We're looking at an impact of about a hundred thousand dollars to a million dollars for one of our customers.

If you need any help in reviewing the actual increase, take a look at the whitepaper on our website. Or contact us and we'll further explain the impact of not only the rate increase but the surcharge as well.

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