With FedEx and UPS both announcing rate hikes last year, I wanted to take a quick moment to break down the changes in shipping rates:
FedEx’s rate hike took effect on January 2, 2017. Some of these changes include:
- FedEx Express rates are increasing by an average of 3.9% for U.S. domestic, U.S. export, and U.S. import services;
- FedEx Ground and FedEx Home Delivery rates are increasing by an average of 4.9%, with FedEx SmartPost rates also changing;
- FedEx Express and FedEx Ground U.S. domestic dimensional weight advisor will change from 166 to 139;
- FedEx Freight rates will increase by an average of 4.9%;
- The FedEx Freight extreme length surcharge will change from $88 to $150, and will be applied to shipments 12 feet or greater compared to the prior 15 feet
While UPS announced their own changes, effective December 26th, 2016:
- UPS U.S. Ground service will increase by an average net of 4.9 percent;
- Daily rates for UPS U.S. Air and International services will increase by an average net of 4.9 percent;
- UPS Air Freight rates within and between the U.S., Canada, and Puerto Rico will increase by an average net of 4.9 percent, also effective December 26, 2016;
- UPS Freight general rates will increase by an average net of 4.9 percent, effective September 19, 2016;
- The Remote Area Surcharge applied to Alaska will increase by $1.00, and Hawaii’s will increase $0.25;
- The Large Package Surcharge will increase $2.50;
- The Oversize Pallet Handling Surcharge will increase $3.50;
- The Oversize Pallet Handling Surcharge will increase $3.50
Along with the increased shipping rates, FedEx will change the way they adjust for their Fuel Surcharge. In the past, adjustments were made on a monthly basis with a two-month lag between published fuel indexes and fuel surcharges. Moving forward, FedEx will reduce that time from two months, to two weeks. They say this will allow closer alignment and better management of fuel cost and surcharges at the time of shipment.
What stands out the most is that FedEx will be updating their dimensional weight calculation. Prior to the change, the Dimensional Divisor was 166. Effective Jan 2nd, 2017 the Dimensional Divisor will be 139 which, incidentally, is the current divisor for international export and import shipments.
To break that down a little bit, shipments that were not charged dim weight based on the previous divisor will now be charged for a greater dim weight if the dim weight is greater than the actual. FedEx is not alone in their dimensional changes. In May, UPS announced that they are updating the measurement that determines whether or not the “UPS Additional Handling Charge” will be applied to a UPS Ground services package. Previously, any item with the longest side measuring over 60 inches would be assessed an additional handling fee of $10.50. Moving forward, that measurement will be 48 inches.
And . . . if you need a little help to ensure you’re getting the best rates, check out a platform like ShipHawk, where you can compare rates from multiple carriers (on top of a multitude of other features) to find the best option for you.