Shipper Beware: Watch Out for Hidden UPS Fees

In a previous October blog post, we discussed the UPS surcharges for 2024. In addition to a general rate increase (GRI) of 5.9%, UPS increased its domestic surcharges by an average of 12%, added about 20% to its additional handling surcharges, and increased its ground residential surcharge by 8%. For larger packages, UPS instituted a 21% average surcharge increase.

While these higher surcharges represent bad news for parcel shippers who rely on UPS, that’s not even the worst of it. On closer inspection, UPS is dramatically increasing the number of US households that are subject to some of its surcharges.  

At first glance, it seems trivial that UPS would add 143 zip codes to its delivery area surcharge (or DAS) regions, while removing 155 zip codes that were previously subject to the DAS. However, we need to consider how many consumers live in the affected zip codes. 

The facts: Nearly 3 million new US households are now subject to this “extra” delivery fee, while only 15,000 delivery addresses are now exempt from it. As a result, in 2024 about 30% of the US population will live in a zip code that is covered by the DAS.  

If you think this isn’t a big deal, note that DAS fees range from $5.70 to $14.15 per package. That’s on top of the parcel fees UPS is already charging. The addition of 3 million US delivery addresses that are now subject to the DAS is bound to dramatically affect the already thin margins of shippers.   

But wait, there’s more bad news. 

The GRI announced by UPS in October didn’t mention increases in fees for UPS SurePost, described by UPS as an “economy” service in which UPS picks up the package, while the US Postal Service (USPS) makes the final delivery to the consumer’s address. Following a GRI announcement by the USPS on November 15, UPS has announced that its SurePost rates will also increase by 4.8% in 2024. 

While all these rate announcements have created confusion for shippers, one thing is crystal clear: UPS likes to stack on fees, sometimes subtle or hidden ones, that add to its profits while reducing the margins of shippers. How are shippers supposed to navigate all these hidden charges, balancing a high level of customer service and delivery speed with healthy profits? 

Knowledge Is Power 

The first step to profitable parcel shipping in 2024 is to understand, at a granular level, what these new UPS charges mean for your business. How do they affect your core shipping patterns, your key consumers, your average parcel sizes and other business parameters? You need to analyze the real, bottom-line cost of using UPS for your everyday shipping activities. 

The second step is understanding that you have options. Today’s global shipping landscape is more varied than ever. Once you know the true cost of working with UPS, you can compare that cost to other carriers. 

What can you do with all this knowledge? You can use it to negotiate new contracts with UPS, as well as other carriers, that minimize your overall shipping costs, while maximizing service and margins. Today’s diverse parcel shipping landscape gives your business leverage, even with the largest carriers.  

You can also use that knowledge to optimize your overall shipping plans to drive out costs via process automation, smarter packaging tactics, strategic warehouse locations, route optimization and other best practices.  

Amplify That Power by Partnering with Redwood 

If it sounds overwhelming to conduct all this data-gathering, number-crunching and analysis, there’s an easy, affordable solution. 

Hundreds of shippers rely on Redwood and its proven, time-tested Parcel Advisory services to navigate today’s increasingly complex shipping landscape. Redwood’s team of seasoned parcel-shipping experts have been in the business for decades and know exactly how to navigate carrier pricing and contracts. The Redwood team also includes experts on technology and automation, packaging and labeling, and even network design and routing.  

Redwood’s seasoned professionals cover every aspect of parcel shipping. They can not only help you identify the best carriers, but also help configure your supply chain for maximum service and profitability. 

While the constant announcements and confusing pricing structures from UPS and other major carriers may seem overwhelming, Redwood’s dedicated parcel expertise and hands-on experience across hundreds of customers provides your business with an enormous advantage. We can help you control your own destiny as you navigate these new UPS charges, along with other inevitable changes, with confidence and intelligence.  

Ready to prepare for a profitable and successful new year of parcel shipping, even when faced with hidden fees? Reach out to Redwood today to reveal your true potential.