What do you do when no one’s watching 👀?
Apparently, UPS updates SurePost rates.
ICYMI: 2024 SurePost rates are available
[eff Dec 26]
UPS announced a 5.9%* GRI in mid-October.
*[“average” 5.9%, but net impact can be higher]
This didn’t include SurePost.
UPS was waiting on the USPS GRI details.
[announced Nov 15]
SurePost uses USPS Parcel Select for final delivery.
[for ~60% of packages]
Parcel Select rates increase an average of 4.8%.
[2-9 lbs, DDU entry – high % of SurePost volume]
But another cost factor plays into SurePost rates.
UPS labor costs.
UPS drivers deliver ~40% of SurePost packages.
Which will increase to 50% over 5 years.
[part of the new UPS/Teamsters agreement]
Labor costs are front-loaded in the agreement.
Meaning year 1 labor costs increase a lot.
2023 SurePost rates increased 7%.
[2-9 lbs]
So, considering the cost and pricing factors:
1. Avg UPS 2024 GRI: 5.9% (non-SurePost)
2. Parcel Select avg increase: 4.8%
3. Labor cost increase spike
4. Higher % SurePost delivered by UPS
SurePost rate increase >= 5.9%, right?
Nope.
Average increase is 4.9%.
And it’s a flat 4.9% up to 9 lbs.
This differs from standard GRI’s.
Where % increases vary by weight and zone.
This is a bit out of character for UPS.
They see themselves as the premium package carrier.
Even with an economy service like SurePost.
[list rates > FedEx Ground Economy]
And a flat % increase is virtually unheard of.
UPS (and FedEx) like to make pricing complicated.
Is this the new UPS pricing approach?
Simple pricing, undercutting the competition?
[obscene levels of sarcasm implied]
I doubt it.
TBH, published rates are a directional pricing indicator.
Net pricing is what matters.
[inclusive of discounts, rebates, contract terms]
But, I’m still a bit surprised.
Maybe UPS is feeling pricing pressure in lightweight segments.
Courtesy of USPS Ground Advantage.
[and likely Amazon Shipping before long]
Maybe UPS is in the holiday spirit.
Giving back to customers.
[sarcasm again, just can’t help it]
Regardless of reason, the SurePost GRI is simpler.
It’s more affordable / less painful.
-----
-UPS SurePost rates go up 4.9% Dec 26
-SurePost GRI < UPS 5.9% GRI on other services
[and less than FedEx Ground Economy]
-4.9% increase is flat 1-9 lbs
Happy GRI season, courtesy of UPS.
#logistics #rateincrease #ecommerce
