DC Velocity - June 2016

For ground parcel shippers in the U.S. and Canada, it’s gotten more expensive to be long.

As of June 6, any shipment moving on UPS Inc.’s domestic ground network or FedEx Corp.’s domestic or U.S.-Canadian ground network is being assessed a $10.50 “ additional handling fee” if the longest side of the shipment exceeds 48 inches. Previously, the fee wasn’t imposed until the length of a parcel’s longest side exceeded 60 inches. The long side’s absolute maximum length is 108 inches.

At FedEx, the change took effect June 1. It kicked in at UPS five days later. The moves follow policies that took effect Jan. 1 to raise the so-called additional handling fees to $10.50 from $9.

The most recent edict marks the seventh price increase of some type applied by UPS within the past 18 months, and the sixth imposed by FedEx, according to Thomas Andersen, vice president of LJM Consultants, a firm that audits FedEx and UPS invoices for clients and handles contract negotiations with the carriers. Andersen’s comments appeared in the industry trade magazine Parcel.

The two firms have a near-monopoly over the U.S. business-to-business ground parcel market and a strong—though not nearly as dominant—position in busi-ness-to-consumer deliveries. They have moved in virtual lockstep during the past seven years in imposing rate increases as well as new accessorial charges—or modifications to existing ones—for services rendered beyond basic pickup and delivery.

SPECIAL HANDLING REQUIRED

Both companies said the recent adjustments are needed to offset the costs of handling irregular-shaped shipments through their ground delivery networks. E-commerce has broadened the ordering bases for millions of companies, among them produc-

Going long with your parcel traffic?
FedEx and UPS will want more money

ers and retailers of large, outsized products that traditionally were sold in stores but can now be ordered online. A growing number cannot be processed through the carriers’ mechanized systems because those systems were designed and built to handle smaller, lighter shipments with routine dimensional characteristics. As a result, shipments with a specific combination of dimension, size, and weight require special handling and incur additional costs, the companies said.

Fred Smith, FedEx’s found-
er, chairman, and CEO, told an
industry conference last October
that in visiting one of the compa-
ny’s ground hubs, he was struck
by the number of unconventional
shipments that had been ordered
online that FedEx Ground had to
process. Smith cited kayaks as an
example of such consignments that
were difficult, if not impossible, to
run through FedEx’s conveyance
system.

In general, the online availability of so many traditionally store-bought items such as mattresses and desks poses a handling challenge for parcel carriers.