UPS Freight Announces Rate Increase

February 13, 2019


UPS Freight, the less-than-truckload (LTL) arm of UPS, announced on February 8th that general rates will increase by 5.9% effective February 18, just a ten-day notice for shippers to make any necessary adjustments. According to UPS Freight, the rate adjustment applies to “non-contractual less-than-truckload shipments rated on the current UPS® Freight 525, 560, 570 and 571 tariffs” and the impact of the rate increase may vary by specific lane or shipment characteristic such as weight or class.

As for how these rate increases may vary by lane and/or shipment characteristics, shippers will have to wait until the day they go into effect to view and download the rates.

As we mentioned in a previous blog post, last year’s contract negotiation between UPS and the Teamsters’ union was a drawn-out affair as each side sparred with the other. While the contract was eventually ratified, a potential strike almost became a reality in November. In preparation of a possible strike, UPS Freight cleared its network and contacted its customers “of the potential for service disruption and the need to arrange alternative carriers.” The result of the uncertainty proved costly as noted by UPS on their recent quarterly earnings call. UPS Freight’s segment profitability was reduced by $60 million and some customers did not return their business to the company.

Despite the reduction in profits, UPS Freight had a good fourth quarter. It reported a 6.9% increase in revenue per LTL hundredweight.

As UPS Freight prepares for a U.S. truck market that is expected to be less robust than 2018 but still positive, it is faced with high costs and the need to improve profitability. This is a similar situation that many other LTL providers are in – higher wages, maintaining regulatory requirements, maintenance costs, investments back into networks and so on.

Establishing strong, positive relationships between trucking firm and shipper is a must in order for both to succeed, however, by taking a page out UPS’ small parcel group and giving just a ten-day notice of a rate increase is disappointing. True, it’s for non-contractual shipments but it sends the wrong message to the market.

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UPS Freight Announces Rate Increase

February 13, 2019


UPS Freight, the less-than-truckload (LTL) arm of UPS, announced on February 8th that general rates will increase by 5.9% effective February 18, just a ten-day notice for shippers to make any necessary adjustments. According to UPS Freight, the rate adjustment applies to “non-contractual less-than-truckload shipments rated on the current UPS® Freight 525, 560, 570 and 571 tariffs” and the impact of the rate increase may vary by specific lane or shipment characteristic such as weight or class. As for how these rate increases may vary by lane and/or shipment characteristics, shippers will have to wait until the day they go into effect to view and download the rates. As we mentioned in a previous blog post, last year’s contract negotiation between UPS and the Teamsters’ union was a drawn-out affair as each side sparred with the other. While the contract was eventually ratified, a potential strike almost became a reality in November. In preparation of a possible strike, UPS Freight cleared its network and contacted its customers “of the potential for service disruption and the need to arrange alternative carriers.” The result of the uncertainty proved costly as noted by UPS on their recent quarterly earnings call. UPS Freight’s segment profitability was reduced by $60 million and some customers did not return their business to the company. Despite the reduction in profits, UPS Freight had a good fourth quarter. It reported a 6.9% increase in revenue per LTL hundredweight. As UPS Freight prepares for a U.S. truck market that is expected to be less robust than 2018 but still positive, it is faced with high costs and the need to improve profitability. This is a similar situation that many other LTL providers are in – higher wages, maintaining regulatory requirements, maintenance costs, investments back into networks and so on. Establishing strong, positive relationships between trucking firm and shipper is a must in order for both to succeed, however, by taking a page out UPS’ small parcel group and giving just a ten-day notice of a rate increase is disappointing. True, it’s for non-contractual shipments but it sends the wrong message to the market.

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