• Latest
  • Trending
  • All
FedEx, UPS to slap major handling surcharges on more parcels

FedEx, UPS to slap major handling surcharges on more parcels

November 20, 2019

Global Strategic Sourcing Software Market 2017-2026| SAP Ariba, Coupa, Scout RFP, Zycus, Procurify – Galus Australis

April 16, 2020
Weakest link in supply chain threatens car industry revival

Weakest link in supply chain threatens car industry revival

April 16, 2020
New case reported at Lexington LEX2 warehouse

New case reported at Lexington LEX2 warehouse

April 15, 2020
These inventory trackers will notify you when hard-to-find items are back in stock

These inventory trackers will notify you when hard-to-find items are back in stock

April 15, 2020

Last Mile Delivery Market Analysis, Revenue, Share, Growth Rate & Forecast To 2025

April 15, 2020
Antonov An-225 Mriya: world’s largest cargo plane, history, details

Antonov An-225 Mriya: world’s largest cargo plane, history, details

April 15, 2020
Coronavirus | Punjab all set for wheat procurement within lockdown norms

Coronavirus | Punjab all set for wheat procurement within lockdown norms

April 14, 2020
Copperstate Farms Launches International Cannabis Brand DNA Genetics in Arizona Market

Copperstate Farms Launches International Cannabis Brand DNA Genetics in Arizona Market

April 14, 2020
Mzee Moi’s Ksh10B Gift to Gideon

Mzee Moi’s Ksh10B Gift to Gideon

April 14, 2020
Covid Knights: Corporate social purpose in the time of COVID-19

Covid Knights: Corporate social purpose in the time of COVID-19

April 14, 2020
How Tesla And BMW Are Leading A Supply Chain Renaissance With Blockchain

How Tesla And BMW Are Leading A Supply Chain Renaissance With Blockchain

April 14, 2020
Last Mile Delivery Market Worth Observing Growth | UPS, FedEx, SF Express

Last Mile Delivery Market Worth Observing Growth | UPS, FedEx, SF Express

April 14, 2020
  • Supply Chain
  • Logistics
  • Warehousing
  • Procurement
  • Shipping
  • More
    • Strategic Sourcing
    • Spend Analysis
    • Inventory
    • Contact Us
No Result
View All Result
United States International Supply Chain Commission
United States International Supply Chain Commission
Home Logistics

FedEx, UPS to slap major handling surcharges on more parcels

by usiscc
November 20, 2019
in Logistics
0
FedEx, UPS to slap major handling surcharges on more parcels
492
SHARES
1.4k
VIEWS
Share on FacebookShare on Twitter

Customers of FedEx Corp. (NYSE:FDX) and UPS Inc. (NYSE:UPS) that tender a lot of packages weighing 50 to 70 pounds are in for some price pain in 2020 unless they are excellent contract negotiators.

The reason: For the first time, FedEx and UPS will slap an “additional handling surcharge” on air and ground deliveries of parcels in that weight range. Currently, shipments up to 70 pounds are exempt from the surcharge. The changes take effect when the carriers’ 2020 rates kick in, which will be Dec. 29 for UPS and Jan. 6 for FedEx.

The policy changes will subject far more parcels to the surcharge, which appears to be substantial. Shippers tendering heavy parcels can expect a 15-24% per-package increase over the carriers’ base rates and fuel surcharges, both of which are also increasing, according to Matthew White, a strategist for iDrive Logistics, a consultancy. UPS, which released its 2020 rate schedule Monday night, said it will raise list, or non-contract, rates on parcel services by 4.9%. That is the same as FedEx, which disclosed its 2020 rates in mid-September.

B2B shippers currently make up the lion’s share of the companies tendering the heavier goods. That may change, however, as more business-to-consumer traffic enters the space with the increasing popularity of online buying.

UPS currently has a $44.43 base rate on a 50-pound ground commercial parcel moving between 1,000 and 1,400 miles and has five-day transit times, according to figures compiled by iDrive. UPS also assesses a $3.22 fuel surcharge, bringing the total to $47.65. Come 2020, that same shipment will be assessed a $24 handling surcharge on top of a $46.75 base rate and a $5.12 fuel surcharge. This will bring the total charge to $75.69, a 58.8% year-on-year increase, according to iDrive. Applying the same set of numbers to FedEx will yield a 58.6% increase, according to iDrive data.

The increases will fall hardest on mid-market and small to mid-size shippers who don’t have the negotiating leverage of big shippers with enormous volumes, according to White. High-volume shippers whose parcels fall predominantly within the 50-70 pound weight band might be able to bargain away about half of the projected increase during contract talks with the carriers, White said. But no one will emerge unscathed, he predicted.

Parcels weighing 50 pounds and above are typically costlier for the carriers to handle because they often have irregular dimensions that require special handling by the carriers. The question, according to White, is whether those higher costs justify such massive rate hikes.

Steve Gaut, a UPS spokesman, said that because heavier parcels are more likely to be asymmetrically shaped, they would be priced under a formula based on the shipment’s dimensions rather than its actual weight. That is often a costlier proposition for the shipper. Such a shipment may also have to be hand-processed outside of UPS’ new facility network, which is being built to handle smaller, symmetrical packages that account for most of its volumes, Gaut said. In some cases, even parcels with symmetrical dimensions require special handling if they have challenging delivery characteristics, Gaut said. 

All this requires additional labor and costs, the company has said. “We are charging customers for the value we provide,” he said.

Jonathan Lyons, a FedEx spokesman, said the surcharge is needed to offset the higher costs resulting from a “surge in oversized and heavy items” that are ordered online. Changes to the company’s operations are necessary to “ensure that we continue to provide the level of service that our customers expect while responsibly managing capacity through our network,” Lyons said.

The higher-weighted parcel segment is less price-sensitive and tends to stick with their carriers. That is one reason UPS and FedEx feel comfortable expanding the surcharge, according to White. However, weights of business-to-consumer (B2C) traffic that dominate e-commerce have been rising as more manufacturers and retailers throw open their stock-keeping units (SKUs) for online purchases.

The more relevant reason is that the carriers — unlike in the lower weight bands where the provider market is more competitive — have a duopoly at the higher weights, White said. The U.S. Postal Service (USPS) is not price-competitive, and Amazon.com Inc. (NASDAQ:AMZN) is not a meaningful player in the B2B parcel segment where many of the shipments are found, he said. With the market belonging to UPS and FedEx, they could price their services accordingly, he said.

Lighter-weight shipments, those in the 4-10 pound range, still account for the bulk of B2C traffic.

Share197Tweet123Share49
usiscc

usiscc

  • Trending
  • Comments
  • Latest

Global Strategic Sourcing Software Market 2017-2026| SAP Ariba, Coupa, Scout RFP, Zycus, Procurify – Galus Australis

April 16, 2020
Antonov An-225 Mriya: world’s largest cargo plane, history, details

Antonov An-225 Mriya: world’s largest cargo plane, history, details

April 15, 2020
3 keys to mitigating severe supply shortages from coronavirus disruption

3 keys to mitigating severe supply shortages from coronavirus disruption

March 18, 2020

Global Strategic Sourcing Software Market 2017-2026| SAP Ariba, Coupa, Scout RFP, Zycus, Procurify – Galus Australis

0
Global Industry Analysis, Size, Share, Growth, Trends, and Forecasts 2016–2024 – ZMR News Reports

Global Industry Analysis, Size, Share, Growth, Trends, and Forecasts 2016–2024 – ZMR News Reports

0
PHOTOS: Ottawa firefighters respond to warehouse fire

PHOTOS: Ottawa firefighters respond to warehouse fire

0

Global Strategic Sourcing Software Market 2017-2026| SAP Ariba, Coupa, Scout RFP, Zycus, Procurify – Galus Australis

April 16, 2020
Weakest link in supply chain threatens car industry revival

Weakest link in supply chain threatens car industry revival

April 16, 2020
New case reported at Lexington LEX2 warehouse

New case reported at Lexington LEX2 warehouse

April 15, 2020
  • Privacy Policy
  • Terms of Use
  • Disclaimer
  • DMCA
  • Contact Us

Copyright © 2020 usiscc.org.

No Result
View All Result
  • Supply Chain
  • Logistics
  • Warehousing
  • Procurement
  • Shipping
  • More
    • Strategic Sourcing
    • Spend Analysis
    • Inventory
    • Contact Us

Copyright © 2020 usiscc.org.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.