UPS, FedEx to Raise Shipping Rates

Starting in 2012, United Parcel Service and FedEx Corp., two of the world’s biggest parcel shippers, both plan to raise shipping rates.

UPS, the world’s largest trucking and delivery company, said last week that starting Jan. 2, 2012, it would raise its base ground and air freight shipping rates by 5.9 percent and UPS Air and International shipping rates by 6.9 percent.

The company also said that it would decrease fuel charges on ground shipments by 1 percent, and air shipments by 2 percent, which is equivalent to a net 4.9 percent increase in rates, factoring in the base increase.

The Atlanta-based UPS said that rate increases are necessary due to increased cost and demand for its services, as well as the company’s recent investments in its global logistics service.

UPS follows rival FedEx in raising rates. FedEx earlier in the month announced similar increases on base rates of 5.9 percent and a decrease on fuel surcharges of 2 percent.

More Shipments
Both companies, which handle freight, logistics, and shipments for consumers and businesses, have experienced growing demand. The growth of e-commerce and online shopping has boosted revenues for UPS and FedEx. 

FedEx expects Dec. 12 to be the busiest day of its history, due to expected shipment levels. On that day, more than 17 million units of items—more than double the average daily volume—are expected to be shipped.

The company forecasts that between the Thanksgiving and Christmas holidays this year, more than 260 million shipments will exchange hands, which would be a 12 percent increase over last year.

“E-commerce continues to grow and demand increases with more customers shopping and conducting their business online,” said FedEx CEO Frederick W. Smith in a statement. FedEx will hire 20,000 temporary employees during the holiday season to manage the heightened demand.

UPS expects to hire 55,000 seasonal workers and expects a daily volume of 25 million packages routing through its network. 

“Early indications point to a solid holiday shopping and shipping season,” Alan Gershenhorn, UPS’s chief sales and marketing officer, said in a statement. 

“To handle the holiday rush and maintain the reliability that’s needed when shopping close to Christmas, we’re flexing every part of our global small package network,” he continued.

USPS Also Hikes Rates
By contrast, the United States Postal Service (USPS) has struggled. Last week, USPS announced a massive annual loss of $5.1 billion due to decreasing mail volume and increasing benefit costs.

USPS, a federal government public enterprise, said that first-class mail revenues declined by 6 percent year-over-year, while total-mail-volume dropped 1.7 percent.

The post office also announced a price hike of 1 cent for first-class mail, starting on Jan. 22, 2012. First-class and forever stamps will cost 45 cents going forward. In addition, cost of mailing letters to Mexico and Canada will increase 5 cents to 85 cents per envelope.