Parcel: Still Surging

Late last year both FedEx and UPS announced parcel rate hikes, but according to Jerry Hempstead, president of Hempstead Consulting, a parcel consultancy, increases are “not linear by weight nor are they linear by zone.” Fedex also increased many of the most frequently used accessorial service charges such as residential, address correction, delivery area and extended area surcharges.

“The great concern to most shippers is the constant increase in ‘minimum’ charges,” says Hempstead. Today the minimum charge for a ground package is $5.49 before the fuel surcharge, that will be increasing to $5.84 – a 6.34% increase not accounting for the change in the fuel surcharge.”

The United States Postal Service, a competitor in the two- to three-day air market also increased rates late last year.

“But there is little overall organic package growth going on in the marketplace,” says Hempstead. “As a result, they need to continually increase top line revenue by charging more.”

So what can shippers do? They can protect themselves by developing a model that reflects buying patterns of services and distribution of packages by zone and weight:

“This is easily accomplished by downloading a shipment history from the carrier web site,” he says. “Always remember that everything in life is negotiable. If you have grown your business with a carrier this past year – in spite of an ailing economy – then perhaps the carrier should be rewarding you with lower costs in 2013.”

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