Despite Lower Fuel Costs, Both UPS and FedEx Intend to Raise Shipping Costs in 2015
As was expected, FedEx released news in September that it will be increasing shipping costs by 4.9% starting on January 5, 2015; not to be outdone, arch-rival UPS recently released its newest pricing plan, which coincidentally will be increased by 4.9% as well, but will be in place starting on December 29, 2014.
The UPS price increase will reportedly affect regions in the U.S., Canada, and Puerto Rico, and will be applied to all residential and commercial transport services, including ground, air, international, and freight transportation. FedEx’s pricing change is also expected to affect residential and home deliveries, and will apply to shipment within and between the U.S., Canada, and Mexico.
The 4-5% rate increase is fairly common for these big shipping companies, and the increase was expected, but many people are noting that it seems odd for both companies to continue increasing shipping rates despite declining fuel costs.
The companies are designing new pricing plans, both of which are expected to be released some time during 2015, and which will incorporate the size of the package being shipped (rather than just the weight) as part of a “dimensional weight pricing” program.
At the moment, many Americans seem satisfied that neither company decided to increase rates in time for the holiday shipping frenzy, and the added bonus of declining fuel costs — just in time for holiday travel — is enough to placate consumers for a while. But perhaps consumers should not be so quick to brush off shipping rate increases, especially since fuel costs are predicted to stay fairly low, and since every year, more shoppers choose to do holiday shopping online rather than in brick-and-mortar stores. It would seem as though neither UPS nor FedEx would have to increase rates by the regular 4-5%.
Instead of focusing on short-term shipping costs (i.e., from now until the end of December), it’s important to remember that the rate increases will have long-term effects and will apply to nearly every type of package transport. Anyone looking to transport larger items — families relocating to a new home, for example, or a corporate relocation — will be greatly affected by the 4.9% increase. Regarding the rate increases, both companies gave consumers about two to three months’ advance notice — which isn’t very much time to reassess shipping costs for someone who has been planning a big move for a while.
“Rates can actually go up and down based on capacity and the cost of fuel. The cost of shipping a vehicle does vary based on regional factors, the price of fuel and even the time of year. DAS has actually been able to reduce rates in the last few weeks based on these factors. Typically a 4.9% increase would only increase the rate of an average move less than $55.00,” says Jon Krueger, Service Quality Director, Dependable Auto Shippers.
Independent shipping companies get significantly less press attention regarding price changes, and this causes many people to forget that smaller shipping companies exist. National shipping companies have certain standard rates and policies that must be followed, but smaller companies are often able to provide custom services and pricing plans that are flexible and are created from a variety of changing factors.
UPS and FedEx may be sufficient for now, but American consumers would do well to keep these alternative shipping options in mind.