UPS Inc. said Friday it would increase its 2012 non-contract rates on ground parcel, domestic air, and U.S.-originating international services by a "net" amount of 4.9 percent, after factoring in reductions in applicable fuel surcharge.
The Atlanta-based transportation logistics giant said it would raise its base rates by 5.9 percent on its ground parcel shipments tendered on tariffs. The net increase will be 4.9 percent after including a one-percentage-point reduction in the applicable ground fuel surcharge, UPS said.
For its other services, the 6.9-percent increase in base rates will be adjusted downward by a two-percentage-point cut in its applicable fuel surcharge, UPS said.
UPS added that it would raise its next-day and second-day air-freight rates by 5.9 percent on a net basis. Rates on the company's three-day freight service will remain unchanged.
Jerry Hempstead, president of a parcel and postal consulting firm that bears his name, called the increases "modest" and the "same as [UPS] has been doing annually for years."
FedEx Corp., UPS's chief rival, already announced a base rate increase of 5.9 percent on all of its domestic express services as well as U.S. import and export express services. Those increases will be offset by a two-percentage-point reduction in applicable fuel surcharges. FedEx has not announced 2012 rate actions for its ground parcel services.
Hempstead said UPS and FedEx, which have a virtual duopoly on the U.S. parcel market, have used their leverage to impose higher rates and fees with little pushback from shippers.
"If you look at how the rates have gone up and compounded for the last five years, it would make every business envious," Hempstead said. "Unlike banks, UPS and FedEx are making fee increases, new fees, and price increases stick."
Gartner, Inc.
