CSCMP's Supply Chain Quarterly
November 16, 2018
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July 9, 2018

Spend Management Experts (SME) Highlights UPS Rate Increases for Shippers

July 9, 2018 (Atlanta, GA) - UPS has made several surcharge increases recently, which will have a significant impact on shippers. These increases are part of UPS' efforts to continuously look for pricing initiatives which align revenue to cost to serve as well as the value UPS creates for customers.

Below, Spend Management Experts, a leading supply chain spend management consultancy, outlines these recent increases and what they mean for shippers.

The Increases:
• Effective June 4, 2018 - The fee for Over Maximum Limits and the Oversize Pallet Handling Surcharge increased by $150.00 and a new Shipping Charge Correction Audit fee was added.
• Effective June 11, 2018 - Ground Fuel Surcharge will increase by 0.5% for all thresholds.
• Effective July 8, 2018 - The Large Package Surcharge for any US Domestic package delivered to a residential address will be $90.00 and the Additional Handling Surcharge for any U.S. Domestic package exceeding 70 pounds in actual weight will be $19.00.

What it Means:
On top of the average 4.9 percent annual rate increase, additional surcharges will mean even higher costs to shippers. Examples of what the latest surcharges will mean:
• Over Maximum charge tends to impact those large, heavy items that really belong in the UPS Freight or other LTL network.
• Oil prices have gone up double-digits since last year and to make sure UPS is not negatively impacted by any sudden fluctuation, it has changed its UPS Fuel Surcharge. Earlier this year, it changed its International Export fuel surcharge for similar reasons.
• Along with the Over Maximum charge, the Large Package fees are for those items that exceed over 130 inches in girth or with one side greater than 96 inches.

According to Spend Management Experts Founder & CEO John Haber, "UPS is feeling the effects of increasing competition and changing consumer demand, now delivering more residential packages than commercial packages. Infrastructure investments and a costly union negotiation come at a hefty price and these cost increases will help subsidize the investments."

To mitigate the impact of these recent increases, and additional increases expected leading up to peak season, it is important for shippers to identify opportunities to optimize their supply chain networks.

Here is what shippers can do:
• Audit your invoices every week.
• Negotiate - Almost everything is negotiable.
• Still not happy after negotiations? Be willing to diversify your carrier base. There are other options.

About Spend Management Experts
Spend Management Experts is a leading supply chain spend management consultancy that helps companies optimize spend across the supply chain reducing costs by 20 percent or more. Our finance background and experience analyzing shipping costs relative to carrier profitability enables us to develop effective supply chain optimization strategies across transportation, distribution and fulfillment. We leverage cutting-edge proprietary models to identify savings opportunities and build negotiation strategies based on data and meaningful business cases, while providing clients with straightforward details on exactly how savings are derived. For more information, please visit Connect with Spend Management Experts on Twitter, LinkedIn, Google+ and the Spend Management Experts blog.

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