February 7, 2012, 12:13 PM

That shipping rate hike may be higher than it appears

E-retailers may pay more than the 4.9% average hikes cited by UPS and FedEx.

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Shipping rate hikes announced annually by United Parcel Service of America Inc. and FedEx Corp. average about 4.9%, according to the companies. But a recent review of those delivery services’ many rate categories by shipping consultants LJM Freight Auditing and Consulting finds that many shippers, including online retailers, face rate hikes this year of between 6.5% and 8.8%.

The average 4.9% rate increase, which UPS and FedEx typically announce in the fall and start in January, is an overall average based on shipping one pound through 150 pounds to every possible shipping area within eight general zones, says Ken Wood, president of LJM. “There is not a shipper in the U.S. who fits that shipping profile,” he says.

Most parcel shippers (parcels are packages weighing up to 150 pounds) commonly ship packages weighing between one pound and 35 pounds, and UPS and FedEx shipping rates for that weight range have increased this year between 6.5% and 8.8%, Wood says.

The average of 4.9% is derived by including the rate hike of 2.8% for packages weighing from 71 to 150 pounds, but parcel shippers send relatively few packages in that weight range, Wood says.

In addition, Wood notes that rate surcharges and accessorial fees—added charges such as for shipping to rural residential areas or for correcting shipping destination addresses—can add as much as 30% to the cost of shipping a parcel package.

FedEx was looking into the LJM report before commenting on it, a spokeswoman said today. A spokesman for UPS said he was "not able to comment on [LJM's] math or methodology." LJM did not provide a separate figure for an overall average rate hike, but it listed increases for several shipping categories.

Following are average ground service rate increases from UPS and FedEx as compiled by LJM by parcel weight range:

● 1-5 pounds, 7.9%

● 6-10 pounds, 7.5%

● 11-20 pounds, 7.1%

● 21-30 pounds, 6.4%

● 31-70 pounds, 4.6%

● 71-150 pounds, 2.7%

Following are average air services rate increases from UPS and FedEx as compiled by LJM for level of service:

● Next day air, early morning, 6.5%

● Next day air, 7.6%

● Next day air saver, 7.6%

● Second day air, morning, 6.4%

● Second day air, 7.3%

● 3 day select, 7.9%

Following are some of the percentage increases in UPS and FedEx accessorial fees as compiled by LJM:

● Residential air, 9.1%

● Residential ground, 4.1%

● Residential 100 pounds, 8.3%

● Delivery area by air, residential, 9.1%

● Delivery area, commercial, 8.1%

● Delivery area, extended residential, 8.3%

● Delivery are, extended commercial, 8.1%

● Additional handling, 6.25%

● Large package, 10%

● Collect on delivery, 4.85

● Delivery confirmation, signature required, 7.7%

● Delivery confirmation, adult signature required, 5.9%

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