Shipping carriers typically update their rates around the start of the new year, but this year you’ll want to start planning for earlier changes. 2018 UPS shipping rates go into effect Dec. 24, 2017 (compared to Jan. 1, 2018 for FedEx 2018 rates and Jan. 21, 2018 for USPS), which means any holiday package returns you ship with UPS will include the 2018 rates. Let’s take a look at some of the key changes going into effect on Dec. 24 and how they may affect your shipping strategy.
2018 UPS Rate Increases
The rates for UPS Ground will increase an average net 4.9 percent, as well as UPS Air and International services. It’s important to keep in mind that this is just the average increase across all shipping services, and that rate changes will vary based on weight, shipping zone and delivery service.
Let’s take a look at UPS Ground rate changes. When reviewing the breakdown by weight, packages in the 16-20 lb. range experience the greatest increase, followed by packages in the 6-10 lb. range.
When conducting the analysis based on shipping zone, packages going to Zone 4 experience the biggest increase, followed by packages going to Zone 3.
The UPS Ground minimum cost per package (lowest cost no matter what your earned discount) for a 1 lb. shipment will be $7.57, but that’s only the shipping charge and doesn’t account for residential and fuel surcharges. When adding those costs in, the lowest cost for a UPS Ground package will be $11.84.
Dimensional Weight Divisor Changing from 166 to 139
The dimensional (DIM) weight divisor on packages measuring less than one cubic foot (1,728 cubic inches) will be decreasing from 166 to 139 for all U.S. domestic services subject to Daily Rates or Alaska and Hawaii Rates. This will be a significant increase for shippers of lighter packages and removes a key advantage that UPS enjoyed over FedEx, which also applies a 139 divisor to these packages. If you ship primarily lighter weights with UPS, you need to understand the impact that this will have on your business, as it could amount to a substantial rate increase well above and beyond the announced average increase of 4.9 percent. See the table below for an example of how this change could impact rates. All examples use the zone 8 rate.
12x10x10 Package – 2 lbs. – Shipped UPS Ground to Zone 8
|DIM Weight Divisor||Billable Weight||Shipping Rate|
|DIM Divisor = 166 (2017)||7.23 lbs rounded up to 8 lbs||$14.94|
|DIM Divisor = 139 (2018)||8.63 lbs rounded up to 9 lbs||$15.73 (+$0.79)|
By changing the DIM divisor from 166 to 139, this has added an additional pound to the package, with the shipping rate increasing by $0.79.
Large Packages Surcharge Increasing
Anyone shipping larger, heavier items should plan for additional increases when the 2018 rates go into effect.
- The Large Package Surcharges will be increasing 14.3 percent, to $80, on Dec. 24, and will increase again on July 8, 2018 to $90, which will be an additional increase of 12.5 percent, for an overall increase of 28.6 percent from the current charge.
- The “Additional Handling” surcharge will increase 10.6 percent, to $12, on Dec. 24, and will increase again, to $19, on July 8, 2018. The overall increase from the current charge of $10.85 to $19, the charge that goes into effect on July 8, 2018, will actually be 75.1 percent.
The steep rise in these surcharges is a direct response to an increase in the number of bulky items being shipped (like furniture, mattresses and sports equipment). The automated systems UPS uses to sort and process shipments can’t handle these larger items, so they require special handling, and the carriers are passing the cost on to the shipper. The UPS Over Maximum Limits charge applies to packages weighing more than 150 pounds, exceeding 108 inches in length or exceeding a total of 165 inches in length and girth combined.
Also new with the 2018 UPS rates—effective Dec. 24, the Large Package Surcharge will apply to any U.S. domestic package with a length exceeding 96 inches, or exceeding 130 inches in length plus girth.
UPS Surcharge Comparison – 2017 vs. 2018
Find more information on additional UPS shipping surcharge changes below:
How we generated the information for this blog post:
- Rate source: UPS Ground Daily rates (PDF)
- Calculation method: We calculated the difference between the 2018 and 2017 overall shipping rates for the different weight groups (up to 50 lbs.) across shipping zones (2-8). To determine the shipping rate increase percentages for the different weight groups, we divided each difference by the corresponding 2018 overall shipping rate. UPS Daily rates were used.