Parcel - January/February 2009 - (Page 20)

feature: UPS Rate Analysis The United Parcel Service Rate Increase: GUIDING YOU THROUGH the MAZE BY JOE LOUGHRAN n January 5, 2009, United Parcel Service’s (UPS) new rates went into effect. There were signiﬁcant increases in all service areas, greater than in previous years. No service sector went untouched. Ground service had a healthy increase, while Air rates continue to skyrocket. International rates had a strong increase, too. Surcharges, differentials and accessorials saw their share of increases as well. This is my 12th Edition of the Annual UPS Rate Analysis. I recently spent some time looking back at the earliest ones and what immediately struck me was how complicated carrier pricing has become. It’s become a Rubik’s Cube. Somehow, I think the carriers like it that way — the more complicated, the better! Let’s take a few minutes to walk down memory lane, shall we? • Do you remember when the annual rate increase used to begin in February? It sure did! • Do you remember when Ground rates used to go up a modest 2.5%? That’s a fact! • Hundredweight used to have eight tiers. I wonder what happened to that lost tier. • Do you remember when there was no Fuel Surcharge? If you can remember back to the year 2000, you can. • Twelve years ago, there was not a Fuel Surcharge, Delivery Intercept, On-Call Pick-up, Voice Notiﬁcation, Return Labels, Authorized Return Service, Returns on the Web, Delivery Area Surcharge, Extended Delivery Area Surcharge, Large Package Surcharge, Remote Area Surcharge, Pick-up of UPS Returns Services Shipments, Over Maximum Limits, and Excessive Package Tracking, Tracing and Refund Requests. O Exhibit 1 is a char t showing the historical trend of the base charge for a 15-pound commercial package from 1998 to 2009. If only it was that easy. Now let’s look at that same char t after adding in Fuel Surcharges and a Deliver y Area Surcharge (Exhibit 2). EXHIBIT 2 $ 18 16 14 12 10 $ Price (Includes Base, Fuel Surch., D.A.S.) $ $ $ $ 8 6 4 2 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year $ $ $ $ EXHIBIT 1 $ $ $ $ Hopefully, after all these years, you’ve learned not to rely upon UPS press releases for accuracy (or your budgeting) as it relates to planned “percentage increases” in rates because they are not reﬂective of actual shipping cost. If UPS delivered packages with the same reliability as their press releases, on-time delivery would be a distant dream. The last thing The Tightest Ship in the Shipping Business wants you to ﬁgure out is that you’re about to experience The Highest Increase in Parcel Shipping History! SHIPPER ALERT: If you relied on the UPS press release to help you set your 2009 budget, you will not have budgeted nearly enough dollars because the rate increase is not consistent across all weights and zones. It’s time to phone the accounting depar tment. This article provides a detailed analysis of this year’s UPS rate changes. Why UPS? Because they dominate the industry and, for the most part, establish the pricing direction, while other carriers follow. Our ﬁndings show signiﬁcant increases in all service sectors — ground and air, domestic and international. The prominent accessorial charges were increased. Collectively, your total shipping costs will rise signiﬁcantly. Let’s take a look! 16 14 12 10 $ Base Price 8 6 $ $ $ 4 2 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year $ 20 JANUARY - FEBRUARY 2009 / www.PARCELindustry.com http://www.PARCELindustry.com

Table of Contents Feed for the Digital Edition of Parcel - January/February 2009

Parcel - January/February 2009 Contents Editor’s Note Going Global Transportation ABCs Mastering Management Regional Alternatives Practical IT Best Practices Packaging 12th Annual UPS Rate Analysis Navigating Dim Weight Charges More than Just a Postscript Understanding RFID PARCEL Counsel New Products Reality Check

Parcel - January/February 2009

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