Many mid- to large-volume shippers are led to believe that they enjoy significant “incentive discounts” from UPS and FedEx because these discounts are featured so prominently in the first pages of UPS and FedEx invoices. However, these same shippers may not realize the extent to which these parcel carriers’ surcharges, especially those applied after shipping, negate such favored rates.
UPS has 80 plus “ancillary charges”—also known as surcharges, adjustments, fees, value-added service charges, and other charges. These Surcharges range from the most common—such as Fuel Surcharges (3.5% for Ground; 12.5% Air/International) and Residential Surcharges ($1.75 Ground; $2.10 Air)—to the most surprising—including Excessive Tracking, Tracing & Refund Requests ($3.00).
UPS surcharges range from pennies per piece, on most fuel surcharges, to $12.50 each for Saturday Pick-up & Delivery. The U.S. Postal Service®, on the other hand, includes Saturday and Sunday pickup and delivery for no additional charge.
These are roughly the same surcharges that FedEx applies and at the same rates. Effective Jan. 2, 2006, FedEx reported an average increase in their Express rates of 5.5%
and, with a reduction in fuel surcharges, a net average increase in Express of 3.5% (3.9% for Ground).
However, the real cost increases must also consider their surcharges, which also rose. While UPS and FedEx base rates may ‘only’ have gone up in January 2006 by 3.5–3.9% according to these carriers, the real cost increases are hidden in their surcharges. Some of FedEx’s Surcharge Increases included a Residential Delivery Surcharge hike of 5% for Express and Ground Service and a 16.7% hike for Home Service. The Delivery Area Surcharge increased by 4.0%, from $1.25 to $1.30, for Commercial (Ground/Express) and 5.0%, from $2.00 to $2.10, for Residential (Ground/Express) deliveries.
The effect of such surcharges—often added after-the-fact by UPS and FedEx—on the price of each piece can be hard to find, calculate, or understand as they are reported by the carriers, particularly in the UPS Delivery Service Invoice. Also, given the effects of negotiated discounts and after-the-fact surcharges, it is likely that neighboring businesses, shipping the same package to the same location pay entirely different amounts to UPS and FedEx.
With the Postal Service®, however, postage payment is transparent, with no confusing invoices including hidden fees. Shippers know, up-front, exactly what they’ll pay based on weight, Class of Mail™, number of zones, and extra services. Postal fees are truly for extra services, such as Signature Confirmation™, Collect on Delivery (COD), and Return Receipt for Merchandise, which are identified and paid for up-front. In addition, Postal customers can benefit from many rate calculations that are ounce-based versus pound-based. No surcharges are tacked on after-the-fact by the Postal Service.
Unless you are shipping with the U.S. Postal Service, parcel shippers should heed the all-too-common warning of “Buyer Beware.”