Rates in the $320-to-$360 billion truckload market will continue their sharp rise this year because of surging demand in some sectors to replace depleted inventory as well as sharply rising costs for carriers.
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By John D. Schulz · February 15, 2021Rates in the $320-to-$360 billion truckload market will continue their sharp rise this year because of surging demand in some sectors to replace depleted inventory as well as sharply rising costs for carriers.
That’s what leading TL executives and analysts are telling LM as they assess the freight market’s largest sector this year. ​

FedEx, announced additional changes to their 2021 lineup of surcharges on January 15th. The changes will apply to larger volume, or “Enterprise” type shippers, and E-commerce on February 15, 2021.

While the latest set of carrier charges should not be an epiphany to anyone within the shipping community, they can pose significant challenges for some customers. Especially, after what shippers had to endure in 2020. Clearly, all carriers have established a pattern. Many deploying a strategy that is designed to assist in “hedging” for the rising costs of an expanding E-Commerce marketplace, stem the tide of continued constraints on network capacity, as well as protect shrinking profit margins. FedEx, UPS, and the USPS have all made a concerted effort to charge more for the same packages. Levying a series of charges and fees that started back in the Spring of 2020 applied to shipments travelling through their ecosystems.

Good news is that AFMS has been working behind the scenes to assess the impact of all these increases to companies like yours. Don’t’ simply accept these charges without understanding their impact and if you can have these charges reduced or even waived. Given the fact that nobody really knows which of these line items may become “permanent” and that many of these fees are negotiable, a wrong decision could have costly long-term effects. 

Federal Express
Any FedEx shipper who averages 30,000 packages per week starting January 4th, 2021 will be expected to pay an additional $.30 per/pkg. that will be applied to both Express and Ground Residential packages beginning February 15th, 2021. FedEx SmartPost and One Rate Services are exempt.

When one considers the previously announced 2021 Express/Ground Residential GRI and adds it to this latest surcharge, shippers could be looking at impacts ranging from 12.51% (Express Delivery Residential Surcharge) to 15.64% (Home Delivery Residential Delivery Charge) when compared to 2020.

While we mentioned the reshuffling of both carrier’s DAS zips (back in December), FedEx has re-arranged their DAS lineup. Making up for lost time by adding and shifting zip codes to gain parity with UPS. While from a pure numbers perspective this may be true, there are “unique” zip codes that add to the dynamics of these changes. Making it increasingly important to understand the differences between these two carriers. (see table below).

United Parcel Service
Although UPS announced late last year, that they would be re-instating Pre-Peak surcharges, many Peak surcharges were set to either expire (most on January 16th, 2021) or go “until further notice”. UPS has effectively given notice and extended several pertaining to certain Ground Residential, SurePost, Additional Handling and Large Packages.

Effectively re-setting the clock…
Peak Surcharge – Applied to UPS® Ground Residential and UPS SurePost® Packages
A Peak Surcharge will apply to certain UPS Ground Residential and UPS SurePost packages, for all U.S. domestic shipments, for qualifying customers who have shipped more than 25,000 packages during any week following February 2020. The Peak Surcharge will apply in the amounts set forth below to the indicated service levels during the specified Peak Period. Service Levels Peak Period: January 17, 2021 until further notice UPS Ground Residential $0.30 per package UPS SurePost $0.30 per package

Peak Surcharge – Applied to Additional Handling and Large Packages
A Peak Surcharge will apply to packages that require Additional Handling and Large Packages, for all U.S. domestic, U.S. import, and U.S. export shipments, for qualifying customers who have shipped more than 1,000 total packages, or more than 10 packages that require Additional Handling or Large Packages, during any week following February 2020. The Peak Surcharges will apply in the amounts set forth below during the specified Peak Period. Other Charges Peak Period: January 17, 2021 until further notice Additional Handling $3.00 per package Large Package $31.45 per package

AFMS will continue to monitor and provide updates to our customers as changes become available.

​Contact AFMS for a detailed analysis of how these changes can affect your organization at 800-246-3521 or visit us at www.afms.com.

An erratic peak season gives way to the proliferation of same-day logistics startups and an emerging new hierarchy among shippers.  

On Monday January 25th, UPS announced that they have entered into an agreement to sell UPS Freight (UPSF) to TFI International (NYSE and TSX: TFII) for $800 million in a deal that’s expected to close during the second quarter of 2021.
In a press release, UPS Chief Executive Officer Carol Tomé commented that “The agreement allows UPS to be even more laser-focused on the core parts of our business that drive the greatest value for our customers.”
Transaction Highlights

• Includes UPS less-than-truckload (LTL) and dedicated truckload businesses
• Expected to close during the second quarter of 2021

UPS (NYSE: UPS), has entered into a definitive agreement to sell UPS Freight (UPSF) to TFI International Inc. (NYSE and TSX: TFII) for $800 million, subject to working capital and other adjustments.
“We’re excited about the future and the opportunities this creates for both UPS and UPS Freight as part of TFI International Inc.,” said UPS Chief Executive Officer Carol Tomé. “The agreement allows UPS to be even more laser-focused on the core parts of our business that drive the greatest value for our customers.” 
The decision to sell UPS Freight was reached following a thorough evaluation of the UPS portfolio, and aligns with the company’s “better not bigger” strategic positioning.
UPS and TFI International will also enter into an agreement for UPS Freight to continue to utilize UPS’ domestic package network to fulfill shipments, for a period of five years.
The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close during the second quarter of 2021. UPS expects to recognize a non-cash, pre-tax impairment charge of approximately $500 million on its statement of consolidated income for the year ended December 31, 2020.
With an operating history of over 85 years, UPS Freight is one of the largest LTL carriers in the U.S., offering a full range of regional and long-haul solutions and an on-time delivery guarantee for all LTL shipments and is headquartered in Richmond, VA.
AFMS continuously tracks and analyzes these important market changes ensuring our customers understand these changes and how they may be impacted.  Contact AFMS today for no cost evaluation and get a better understanding for your company. 

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United Parcel Service unleashed their 2021 General Rate Increase on Friday, October 29th. Overall, UPS Ground, Air and International rates, will increase an average of 4.9%. Remarkably similar to increases set by FedEx last month. Accessorials, fees and surcharges will see an increase of 4.84% -9.82%. While base freight rates mirror last year’s rate increase of 4.9%, Accessorial fees and surcharges will continue to add to the company’s coffers. SurePost service increases have yet to be posted.
For all the details around the UPS 2021 Rate Increase announcement. Click here (AFMS White paper & analysis)

With the hustle and bustle of the holiday season right around the corner, it's more important than ever for businesses to understand freight pricing and the need for freight pricing support. Freight pricing refers to a freight rate, which is the cost at which your company's cargo is delivered from one area to another.
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