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Rob Martinez

Shipping Insights

By Rob Martinez

About Rob

Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Rob has helped some of the world’s most recognizable brands reduce parcel shipping costs an average of 25 percent through contract negotiations, rate benchmarking, modal optimization, invoice audit and other savings vehicles. A cum laude graduate of UCLA, Rob has 20 years of transportation industry experience, including executive positions at DHL and Stamps.com, in addition to his work as an outside consultant since 2001.
 

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Parcel Rate Increases for 2013 That Retailers Need to Know

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UPS announced 6.5 percent air increases partially offset by a 2 percent fuel surcharge reduction, and 5.9 percent average ground increase offset by a 1 percent fuel surcharge reduction. Rate increases will take effect Dec. 31, 2012.

Similarly, FedEx announced average rate increases of 5.9 percent for express and international services, offset by a 2 percent reduction in fuel surcharges. FedEx hasn't yet announced 2013 increases for FedEx Ground, FedEx Home Delivery or FedEx SmartPost, although it's expected to match the UPS ground increases highlighted above. FedEx's rate increases take effect Jan. 6, 2013.

For most shippers the impact is much higher than the "average" increases announced by the carriers, however, especially for shipments weighing up to 30 pounds. For this key weight bracket, UPS customers on "Daily Rates" will realize the following average increases (not adjusted for fuel surcharge differential):

  • Next Day Air = 7.06 percent
  • Next Day Air Saver = 7.73 percent
  • 2-Day Air AM = 8.23 percent
  • 2-Day Air = 8.15 percent
  • 3-Day Air = 8.80 percent
  • Ground = 6.97 percent.

Here are FedEx's average increases in the same weight bracket (up to 30 pounds) for next year:

  • Priority Overnight = 5.82 percent
  • Standard Overnight = 6.63 percent
  • 2-Day AM = 7.13 percent
  • 2-Day = 7.13 percent
  • Express Saver (3-Day) = 7.88 percent.

Shippers should take note that the ground minimum shipment charge will increase from $5.49 to $5.84, a 6.4 percent increase. Many accessorial charges are as much as 10 percent higher in 2013. Address correction fees, delivery area surcharges, residential surcharges, on-call pickup fees, delivery intercept, declared value and many other fees are well above the "average" increases announced.

In addition, many shippers will begin to feel the effects of 2011's dimensional rule changes as two-year extensions of the old 194 dim divisor are retracted in 2013.

FedEx vs. UPS Published Rates
Shippers should keep in mind that UPS pricing for air services is lower than FedEx.  Shipware has developed the following chart to show the average net differential in the one pound to 30 pounds range.

Shipping Insights chart 1
[+] click to enlarge

United States Postal Service
Express and Priority Mail products are increasing an average of 5.9 percent and 6.3 percent respectively effective Jan. 27, 2013. However, high-volume Express Mail users will only experience a rate increase between 1 percent and 2 percent, and Priority Mail "Commercial Plus" pricing will increase 3.7 percent.

First Class Parcel Service — now a Shipping Services product — will increase an average of 3.0 percent. 

Parcel Select, widely used as a "final mile" residential delivery partner for FedEx SmartPost, UPS SurePost and others, will have an average increase of 9 percent. Parcel Select parcels weighing less than a pound take an average increase of 9.8 percent.

Several new Shipping Services products will be available in January. Free tracking will be offered to all competitive packages, including retail Priority Mail and Parcel Post (recently renamed Standard Post).

A large variety of flat-rate boxes and envelopes for Express Mail and Priority Mail, including the padded and legal-sized flat rate envelopes, will continue to be offered by the Postal Service.

New domestic retail pricing for Priority Mail Flat Rate products includes the following:

  • Small box = $5.80
  • Medium box = $12.35
  • Large box = $16.85
  • Large APO/FPO box = $14.85
  • Regular envelope = $5.60
  • Legal envelope = $5.75
  • Padded envelope = $5.95.
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