UPS 2022 rate increase

UPS 2022 Rate Increase – Parcel Shipping Costs Are Going Sky-High

UPS recently announced their 2022 general rate increase (GRI), which is set to take effect on December 26, 2021. Overall, rates for UPS Ground, UPS Air, and International Services will increase an average of 5.9%.1 The increase is 20% higher than last year and is their largest base rate increase ever. Rival parcel carriers FedEx and DHL have already announced their own hefty 5.9% GRIs for 2022.2

However, as reported in a previous SSI Carrier GRI Analysis blog post, a GRI is truly “general” – at best it is a ballpark estimation of how base rates will increase. As with most general disclaimers, your results may vary. In fact, you may be surprised at how much higher your parcel-shipping rates will rise.

Because the GRI is over and above the previous zonal rate adjustments introduced in April 2021, and since several UPS accessorial charges are rising much higher than 5.9%, your company’s unique shipping requirements will determine the true impact on your bottom line. Let our experts bring you clarity on what the rate increases mean to you. Also, we may have insights on how you can mitigate parcel-shipping cost increases. Contact SSI and let’s talk.

UPS RENAMES PEAK SURCHARGES to PEAK/DEMAND SURCHARGES

Big Brown also announced that beginning on January 9, 2022, its Peak Surcharges accessorial will be renamed Peak/Demand Surcharges. The re-phrasing may seem harmless and UPS has yet to provide specifics on what the new nomenclature means. Yet, one may infer UPS is likely to prolong the traditional holiday peak season surcharge indefinitely – or at least for as long as UPS management deems parcel demand to be “high”. 3

This surcharge is tough on shippers, because parcel demand across all industries is not in their control. Further, demand is likely to remain high for quite some time. Not surprisingly, as e-commerce volume soared this year, UPS has been successful in attracting a growing number of small and medium-sized businesses (SMB), who have driven up demand for residential parcel delivery. SMBs are a profitable business segment for the carrier and of note, the Residential Surcharge will increase by 9% to $4.85 per parcel next year. Speaking of profits, 2021 has been a banner year for the carrier, as CEO, Carol Tomé shared in a recent earning’s call, “in the first nine months of 2021 UPS has generated more operating profits than any full year in our history.” 4

OTHER UPS SURCHARGES WILL HIT RECORD HIGHS

For those of you who ship large packages, the premium surcharge for doing so is much higher, increasing from 8% up to 16.7%. Further the additional handling weight/dimension surcharge will increase from 5.2% to 13.9% depending on zone. 4 You can view the UPS Rate Change Information for up-to-date announcements. 5

HOW MUCH WILL THE UPS 2022 RATE INCREASE REALLY COST YOU?

The rate increase information is a lot to absorb and this blog post is simply scratching the surface. To gain a clear understanding of how the UPS 2022 rate increase will impact your business, we urge you to reach out to our veteran parcel experts to receive an SSI parcel carrier GRI analysis. Simply fill out the form at the bottom of this web page to get the process started.

If you do not already have a parcel contract, you may be missing out on a lot of savings. SSI parcel contract optimization services will help you save money immediately and all year long as you ship smarter every day. Again, please complete the form at the bottom of this page to connect with our experts.

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Footnotes:
1. Jeff Berman, “UPS rolls out 2022 rate increases”, November 1, 2021, as published by Logistics Management.
2. Richard Meldner, “UPS Releases Rate Adjustments for 2022”, October 29, 2021, as published by eSeller365.
3. Mark Solomon, “Vise likely to tighten around UPS shippers in 2022”, November 2, 2021, as published by FreightWaves.
4. “UPS Doubling Down on SMBs and eCommerce Ahead of Peak Holiday Season”, October 26, 2021, as published by PYMNTS.COM
5. UPS Rate Change Information, as published on the UPS website at https://www.ups.com/rateupdates