The Difference is in the Details
Dan Malech, AFMS
Fewer and fewer price differences between the two carriers; UPS & FedEx prices will now be nearly identical for many services
UPS announced their 2016 UPS rates and for the first time, with the exception of Three Day Select and 2DA Letter, Air services match FedEx Express services penny for penny in the continental US. Therefore, UPS will be discontinuing their Standard Rates that they had created to match the FedEx Express Rates. UPS will once again only have Daily rates, with only Three Day Select and 2DA Letters varying from FedEx. The UPS and FedEx continental Ground rates are also identical.
Just like last year, nearly all of the accessorial charges will be identical for the two carriers. Fuel is the one exception, with UPS fuel surcharges tending to be 1.25 to 1.75 percentage points higher. For November, UPS will have a 23.5% higher ground fuel surcharge than FedEx and an astounding 63.6% higher air fuel surcharge.
Third Party Shipments
For the first time ever, UPS will apply a 2.5% service charge on all Third Party shipments. This could have quite an impact depending on the bill type mix in your portfolio.
To reiterate, the 2016 domestic express base rates will now be identical for the two carriers. In the past, FedEx Express has priced their base rates somewhat higher than UPS. However for 2016, The Next Day AM, Next Day PM, 2nd Day AM PKG, and 2nd Day PM PKG rates are identical. Over the last few years, UPS has made an effort to lower the gap between it and FedEx on the express front, and that effort is now all but finished. In order to get to the point of matching FedEx UPS had to have a higher rate increase to achieve this. See below for average increases by service. Furthermore, UPS has done away with their Standard Rate charts that had filled that price gap. The one exception is 3 day air, where FedEx rates are an average of 19.8% higher than UPS, and with some weights and zones over 60% higher.
UPS international increases are somewhat higher than the domestic increases, with some weights and zones up just shy of 9%. The rates up to 25 Lbs take a relative low increase of about 3.5%, but over 25 lbs are closer to 7%.
Here are the average UPS increases by service:
- Ground Commercial 5.8% 1-5 lbs zones 2-8 (4.75% 1-70 lbs.)
- Ground Residential 5.5% 1-5 lbs zones 2-8 (4.73% 1-70 lbs.)
- Next Day Air AM: 5.9%
- Next Day Air Saver PM: 6.4%
- 2 Day AM Air: 8.5%
- 2 Day Air: 8.0%
- 3 Day Select: 6.8%
- Ground Hundredweight: 4.7%
- Air Hundredweight: 5.7%-7.4%
- Ground Standard to Canada: 5.8% 1-5 lbs (3.4% overall)
- International Express OB Lanes:
- China: 6.3%
- UK, NL, FR, DE: 5.9%
- HK, TW, JP, SG: 6.4%
- KR, TH: 6.5%
- International Saver OB 5.0%
- International Expedited OB 5.6%
For a complete cell by cell analysis of the UPS & FedEx 2016 increases, contact AFMS at 800-246-3521