Every year shipping prices go up and many businesses just absorb the cost without really realizing the impact. What does the 2021 UPS Rate increase really mean? We will look at the 2021 UPS Rate Increase Impact for a single shipment and compare it to that of 2020. UPS rates increased by 4.9% on average for 2021 and accessorial fees also increased.
How do we determine shipping costs?
When we look at the price of a package, we have to look at all the characteristics of the shipment. This includes size, weight, zone, speed of delivery, and options/additional fees. Each of these influence the published rate of the package.
Compare 2020 vs 2021 UPS Ground Shipment
Let’s look at a package shipped with 2020 UPS Daily Rates and 2021 UPS Daily Rates. This comparison will really show the impact of the 2021 UPS Rate Increase. The package characteristics are the same.
- Ground Residential Shipment
- Zone 8
- Weight: 16 lbs Billed Weight
- Fuel Surcharge
- Residential Delivery
- Delivery Confirmation Signature
What does the 2021 UPS Package Cost?
As you can see, all of the different charges increased between 2020 and 2021. In 2020, the base rate for this 16lb, Zone 8 Ground package was $25.66. With the 2021 UPS Rate Increase, the shipper will be paying $27.02 for the base rate. Then you have the other fees which also saw an increase in 2021.
What is the published difference in 2020 vs 2021?
|Charge||2020||2021||$ Increase||% increase|
|Delivery Confirmation Signature||$5.25||$5.55||$0.30||5.70%|
What is the discounted difference in 2020 vs 2021?
|Charge||2020||2021||$ Increase||% Increase|
|Delivery Confirmation Signature||$5.25||$5.55||$0.30||5.7%|
As you can see here this shipper paid less due to their discounted rates within their contract. However, even with discount the shipper will pay 7.32% more in 2021.
What is the applied 2021 UPS price increase to this package?
The 2021 price increase applied to this package with all the applicable surcharges and other fees come out to a 5.98% increase for 2021. But when we apply our bulk discounts for this shipper, the actual price increase comes out to a 7.32% or $1.57 increase. Paying $1.57 more may not seem like a lot, but when you’re shipping thousands of packages with the same characteristics, the cost is going to hurt your bottom line. To clarify, that 4.95% increase that UPS mentions yearly does not spread across the board evenly. It definitely does not apply to all shippers as you can see in this case.
How do I lower my UPS shipping costs?
With shipping rates and shopping cart abandonment going up each year, shippers must do something to control their prices while also protecting their bottom line. A company can decrease these costs with full contract analysis and agreement renegotiation. Did you know you can always keep the previous year’s rates with a simple contract negotiation?
Some of our UPS clients have negotiated to have transportation rates, value-added services, and other charges reflect those on the 2020 UPS Rate and Service Guide through December 2021.
Contact your UPS representative to request an exemption to the yearly price increase, or contact the logistics experts at Refund Retriever. We can evaluate your shipping needs and help with a UPS contract negotiation.