DC Velocity - December 2012

newsworthy

UPS’s announced rate
hikes mask real impact

Descartes acquires Exentra for $17 million

to customers

THE RATE INCREASES ANNOUNCED BY UPS INC. ON ITS 2013 noncontract business understate the extent of the cost retail shippers will have to bear next year, according to two parcel consultants.

The Atlanta-based transportation and logistics giant announced in mid-November a 5.9-percent increase on noncontract rates for its core ground parcel business, minus a one-percentage point reduction in applicable ground fuel surcharges. In addition, tariff rates on the company’s air letter, air package, and all U.S.-origin international services will rise 6. 5 percent, minus a 2-percent reduction in fuel surcharges. Rates for the company’s airfreight services moving within and between the United States, Canada, and Puerto Rico will rise 4. 9 percent, as will rates on three-day deliveries within and between the same points.

The new rates, which are essentially a median of the UPS consignment universe, take effect Dec. 31.

However, all UPS rate hikes will not be created equal, according to an analysis by Shipware LLC, a San

Diego-based consultant. For shipments weighing up to 30 pounds— a key weight class for parcels— tariff rates will rise even more, from a 6.97-percent increase for ground to an 8.80-percent hike for three-day air services, according to Shipware. Rates for next-day air deliveries within that weight class will rise 7. 7 percent, Shipware said. The increases calculated by Shipware are not adjusted for the impact of fuel surcharges.

The minimum charge for all ground deliveries will rise 35 cents a
package to $5.84, an increase of 6. 4 percent, Shipware said. It also noted
a near double-digit year-over-year increase in a multitude of UPS’s
“accessorial” charges, fees tacked onto the base rate by the carrier for
such services as “address corrections” and “on-call pickups.”
Tyre Sperling, a UPS spokesman, confirmed the consultant’s estimates.

PHOTO COURTES Y OF UPS INC.

NO RELIEF FROM FEDEX Shippers hoping to ease the pain by switching carriers will likely find little relief. Shipware said the rate increases imposed by rival FedEx Corp. for its air and international services would also exceed the disclosed 5.9- percent “average” rate hike announced by the company. However, the FedEx hikes in the under-30-pound weight class don’t appear to be as hefty as those levied by UPS, according to the Shipware data. For example, rate increases on FedEx’s two next-day delivery services, Priority Overnight and Standard Overnight, will increase by 5. 82 percent and 6. 63 percent, respectively, Shipware said. p. 18

Descartes Systems Group of Waterloo, Ontario, has acquired Exentra Transport Solutions Ltd., a United Kingdom-based provider of software-as-a-service (SaaS) driver compliance solutions for the European Union (EU). Descartes said it paid about $17 million in cash for Exentra, which is headquartered in Chippenham, England.

Exentra’s cloud-based compliance management platform, Smartanalysis, helps truck fleet operators leverage the data from a vehicle’s tachograph to comply with EU-wide legislation governing truck drivers. In the European Union, any truck weighing more than 3. 5 tons is required by law to have a tachograph, a device that automatically records speed and distance as well as driver activity.

Descartes said the acquisition means that Exentra’s customers will be added to Descartes’ cloud-based Logistics Technology Platform, which helps more than 35,000 trading partners connect and collaborate to improve logistics operations.

Descartes said the acquisition will both strengthen the company’s investment in the U.K. market and help improve its own compliance and routing applications. “The EU driver compliance legislation has been in place longer than comparable regulations in North America. In the EU, not only is every vehicle required to have tachograph hardware, but the hardware is standardized and fitted during vehicle production,” said Steve Fisher, CEO of Exentra and director of compliance at Descartes, in a statement. “Our experience strengthens Descartes’ Routing, Mobile, and Telematics suite to address the U.S.