Thanksgiving is coming up, and Christmas and New Years are just around the corner! It's a busy time of year, so we've put together a shipping schedule that you can use to plan around carrier closures. 

You may have heard that FedEx announced its General Rate Increases (GRI) for 2018. In the past few years, UPS has been the first of the two major small package carriers to make an announcement for the coming year, but this time FedEx is taking the lead.

Here are the announced average increases that will take effect January 1, 2018:

• 4.9% for FedEx Express domestic and international services
• 3.5% for FedEx One Rate
• 4.9% for FedEx Ground and FedEx Home Delivery
• 4.9% for FedEx Freight

As it’s important to remember every year, these averages don’t paint a complete picture. The zones you typically ship to and the services you typically use could dramatically affect the actual increase you’ll see on your invoices. Some are much higher than the average, while others are much lower or remain the same. UPS is likely to make its announcement for 2018 rates soon and if history is any indication, the averages will be similar to its competitor. 

FedEx and UPS traditionally have similar average rate increases, but in the last few years their base rates have diverged a bit. Ground base rates used to be nearly identical, but in 2017 the two carriers took different increases in different zones, making it harder to compare apples-to-apples. On top of that, they also implemented slightly different approaches to dimensional (DIM) weight pricing, by using different DIM factors. As a result, looking at what would be most cost effective for you and how your rates will change has become more complicated.

Another trend that we’ve seen from UPS and FedEx is the announcements of additional changes throughout the year, separate from the GRIs. The announced averages have gone down in recent years, but these mid-year adjustments can sometimes have a larger impact.

One example of this is the new peak season surcharges that UPS is implementing for the holidays this year. UPS recently announced that it will apply a 27-cent charge on all ground residential packages during its busiest weeks in November and December. FedEx is taking a notably different approach and forgoing any additional holiday residential surcharges except for  packages that are big or bulky enough to require special handling.

Both UPS and FedEx attribute charges like this to the rise of e-commerce, which has brought a sharp increase in residential shipments, particularly oversized items like furniture and exercise equipment. These kind of parcel shipments put a strain on their networks and their sorting machinery, and they've been finding ways to make up for these costs.

FedEx is also making a couple of additional moves to address the changing nature of parcel shipments in 2018. It will now apply a surcharge for shipments with third-party billing – mimicking a move that UPS made at the beginning of 2016. FedEx will also begin applying a DIM factor of 139 to all SmartPost parcels, effective January 22. UPS already applies DIM weight pricing to SurePost packages, but uses a higher DIM factor for packages 1,728 cubic inches and under.

Every year, when the new rates for UPS and FedEx are out, PartnerShip does a complete analysis so you can determine what effect it will have on your business. Subscribe to the PartnerShip Connection blog to be alerted when it’s out so you can start planning for the new year and learn how to mitigate the rising costs of small package shipping. 

Freight carriers are catching shippers off guard this year by taking their general rate increases (GRIs) earlier than before. Last year, the LTL rate increases came in the fall, but this year many of the major carriers increased their rates in May and June.

• ABF increased an average of 4.9% on May 22

• YRC Freight increased an average of 4.9% on May 29

• XPO Logistics increased an average of 4.9% on June 5

• Estes increased an average of 4.9% on June 26

• UPS Freight increased an average of 4.9% on June 26

Planning and budgeting for your freight
When you look at average LTL rate increases, it’s important to note that you can’t take the average at face value. If you’re trying to determine what kind of effect this increase will have on your freight costs, you will need to look at the specific increases in your typical lanes. Some lanes will have drastically lower or higher increases than the average.

Factors affecting price
There are several factors that contribute to the cost of your freight, and there are several trends that have had an impact recently. In recent years freight carriers have made a push to become more efficient in measuring and classifying freight. Many LTL carriers have invested in dimensioning machines, which makes measuring dimensional weight a lot easier. This means shippers need to be extra careful when choosing a freight class on the BOL to avoid costly reclassifications.

Another factor is capacity. The manufacturing industry is expanding steadily, creating more demand, while the trucking industry is experiencing a driver shortage. The new ELD mandate and hour of services changes will only continue the trend. When capacity is tight, the power is in the hands of the carriers and they can charge more – especially on less profitable lanes.

If you’ve been watching the news the last several months, you probably saw the recent wave of retail chains closing many of their brick-and-mortar stores. Ecommerce has had a profound effect on the market and the trucking industry is not immune. Consumers have come to expect free shipping and are buying more and more individual items online. As a result, there are more residential deliveries than ever before and in some cases there has been a some shift in demand from truckload to LTL.

Offsetting the increases
PartnerShip works to negotiate competitive rates on your behalf with the most reputable LTL carriers in the industry. Combat these rising costs by contacting our shipping experts at 800-599-2902 or email sales@PartnerShip.com.

Get a free quote on your next LTL freight shipment!

In 2015, the Federal Motor Carrier Safety Administration (FMCSA) established standards for Electronic Logging Devices (ELD). An ELD is electronic hardware that connects to a truck’s engine to automatically log hours of service (HOS). Regulating a driver’s hours of service is to prevent accidents caused by driver fatigue. Fleets and owner-operators have until December 18th, 2017 to implement use of ELDs if they have not already done so.

One of the factors surrounding the ELD mandate is its impact on freight costs. In this blog post, we’ll look at some of the factors that will drive freights costs up with use of ELDs. Let’s examine these factors one-by-one.

• Cost of implementing ELD. When electronic logging devices were introduced 20 years ago, a single ELD cost up to $2,500. Today, the FMCSA estimates that the average annual cost of an ELD will be $495 per truck. The cost to implement ELDs will be passed along to shippers but will only marginally drive freight costs up.

•  Decreased productivity. Most carriers that have implemented ELDs have reported productivity decreases of approximately 15% with fewer miles driven per day. ELDs track drive-time to the minute so operating logs can’t be “fudged.”  A driver can no longer report 300 miles driven when they actually drove 600 miles. Some carriers are charging more to make up for this loss in productivity. 81% of large fleets (more than 250 trucks) have achieved full ELD implementation so their rates have “normalized” by now. For smaller carriers, expect nominal price increases of 5-10% for loads that are booked on the spot market.

•  Reduced capacity. Some owner-operators will view the cost to implement ELDs combined with the decrease in productivity as “big brother” meddling in their business and will leave the industry, reducing capacity.

So, what effect will the electronic log mandate have on freight rates? According to transportation economist Noël Perry, truckload rates will increase about 4% this year, with additional capacity pressure caused by the ELD mandate. “The maximum impact will occur in 2018,” says Perry, “and it won’t stop until two to three years afterwards when people finally figure out they have to do it.”

Truckload capacity utilization is expected to remain greater than 100% well into 2017 and Perry puts the chance of a “significant” capacity shortage at 60%, with a 30% chance of a “real whacko” shortage. He also notes that the spot market tends to be much more volatile, with the 4% increase in contract rates translating “easily” to a 15-20% increase in spot pricing.

So, what will electronic logging device regulations mean to shippers?

• As carriers procrastinate to comply with electronic logging device mandate, it will result in fewer available carriers. Consider working with a broker/3PL to offer additional resources to keep your freight moving without any delays.

• Loss of carrier productivity means that shippers will need to better manage their time to ensure on-time delivery. For example, lanes that range from 450-700 miles will be affected as these lanes will turn into two day transit hauls instead of one.

• The truckload capacity crunch could shift some freight that would normally move via truckload to LTL. Working with a broker or 3PL that routinely handles both truckload and LTL will ensure that your business keeps its freight moving!

• Shippers can help drivers become as efficient as possible to decrease time spend on duty, but not driving.  Following these suggestions will increase driver efficiency and create additional capacity to drive down your shipping costs:

o   Have flexible shipping/receiving times

o   Reduce driver wait time

o   Quickly and efficiently load drivers

o   Provide and offer legal parking at pickup and delivery locations

•  Using a broker/3PL will help you fully vet carriers and their ELD compliance.

• Most importantly, as capacity tightens, expect rates to increase. Working with a freight broker or 3PL can help you find the carrier capacity you need and negotiate rates on your behalf.

Working with a freight broker can help you mitigate the costs associated with electronic logging device regulations. Contact PartnerShip at 800-599-2902 or use our contact us form to see how we can help you ship smarter so you can stay competitive.

Dimensional (DIM) weight can be a tricky subject to master. All of the changes that small package carriers UPS and FedEx have made in recent years don’t help. In 2017, FedEx is lowering the DIM factor for domestic packages to 139 from 166. UPS is making the same change for domestic packages less than or equal to 1,728 cubic inches. So how will this change affect you?

First, it’s important to understand what dimensional weight is and how it’s calculated. Dimensional weight pricing is a common industry practice that sets the transportation price based on package volume, in relation to its actual weight. Carriers use dimensional weight in order to account for the space packages take up on their trucks and planes. This allows for a more precise way to charge for their services.

The basic formula for calculating DIM weight is (length x width x height)/DIM factor. For most small packages, the DIM factor will now be 139. The one exception is UPS domestic packages 1,728 cubic inches and under. UPS originally didn’t announce any changes to its DIM weight pricing for 2017, but it followed suit after FedEx announced it would be using 139 as the DIM factor for both domestic and international packages. Let that serve as a reminder to stay informed, as UPS and FedEx are continually making updates to their rates, surcharges, and DIM weight rules.

Once you calculate your DIM weight, compare it to your actual weight. The greater of the two will become the billable rate. When deciding if you need to make any adjustments to how you ship your packages in the upcoming year, start by doing an analysis of your common shipments. Look at those package measurements, calculate the cubic inches (length x width x height), and find the DIM weight to determine your billable weight. For an easy way to determine your billable weight, click here to use our DIM weight calculator.

UPS and FedEx base rates differ quite a bit more in 2017 than they have in the past. Because of this, you’ll want to make sure you’re not just using DIM weight pricing to determine which carrier to use. Download our free white paper, Understanding the 2017 Small Package Rate Increases, for a detailed analysis on the new rates.

Since density is the name of the game, make sure you review your shipment packaging to reduce the size of your package if you can. Don’t use oversized boxes that contain unused space and, where possible, consolidate orders. By being more efficient with your packaging, you’ll ensure you’re not paying to ship empty space.

One of the best ways to offset the rate increases and DIM weight pricing changes is to ensure you’re maximizing any discounts available to you. PartnerShip offers association members discounts on select FedEx services. If you're not sure if you qualify for one of our small package shipping programs contact us and we'll find the solution that's right for you.

Every year small package carriers FedEx and UPS evaluate their shipping rates and make adjustments that can have a substantial effect on you and your business. The UPS rate increases take effect on December 26, 2016, while the new FedEx rates take effect on January 2, 2017. As always, how much more expensive your particular small package shipments will be in the new year depends on many factors, including shipment volumes, sizes, weights, and modes.

Here are some quick facts: 

• FedEx Express and International rates are increasing an average of 3.9%
• UPS Air and International rates are increasing an average of 4.9%
• FedEx Ground and Home Delivery^® rates are increasing an average of 4.9%
• UPS Ground rates are increasing an average of 4.9%
• The dimensional divisor for FedEx domestic packages is changing from 166 to 139
• UPDATE: the dimensional divisor for UPS domestic packages greater than 1,728 cubic inches is changing from 166 to 139
• FedEx SmartPost^®, FedEx One Rate^®, and UPS SurePost^® rates will be changing

The important takeaway when thinking about your shipping expenses in 2017 is that the announced average increases paint an inaccurate picture of the true impact these new rates could have on your business. The shipping experts at PartnerShip^® have dug into the details and analyzed the new rate tables to assess the true impact to shippers and help you make sense of these changes. Learn more about how the 2017 rate increases will affect your shipping costs by downloading our free white paper!

Download Now! Understanding the 2017 Small Package Rate Increases

Get ready for a chance to win! FedEx is giving PartnerShip customers a chance to win up to $10,000, or over 100 other prizes, in the $25,000 Get Ready Sweepstakes. By enrolling in a PartnerShip-managed shipping program, association members will be automatically entered in the sweepstakes. If you are already enrolled in one of our programs, you simply have to join My FedEx Rewards. Then you’ll have a chance to earn up to 51 additional entries.*

Imagine how you could invest in the success of your business with these prizes:

• $10,000 Grand Prize (1) 
• $1,000 First Prizes (10) 
• $50 Second Prizes (100)

Get started. Keep saving.
PartnerShip customers enjoy significant savings on select FedEx® services. The program is free to join and there are no minimum shipping requirements. What’s more, you may be eligible for other special offers and promotions.

PartnerShip works with over 120 major trade associations, across many industries, to provide their members with time- and money-saving tools to help them be successful in all facets of shipping and logistics. If you belong to an association we work with, take advantage of our free shipping benefits today and get in on the $25,000 Get Ready Sweepstakes. If you're not sure if you qualify for one of our association shipping programs contact us and we'll find the solution that's right for you.

*Limit 52 total entries. NO PURCHASE NECESSARY. Void where prohibited. The $25,000 Get Ready Sweepstakes is sponsored by FedEx Corporate Services, Inc. Open to legal residents of the 50 United States and Washington, D.C., age 18 or older who are members of an eligible FedEx Advantage affiliate as of 9/11/16. Begins 9/12/16; ends 11/4/16. For rules, go to smallbusiness.fedex.com/get-ready-rules.

FedEx recently announced changes to its shipping rates for 2017. In a surprising move, these new rates do not match the increases that UPS announced earlier this month. FedEx and UPS typically announce similar rate increases annually, making this year rather unique.

The new rates for FedEx will take effect on January 2, 2017. FedEx Ground services will increase an average of 4.9%, matching the announced average increase for UPS Ground that will take effect on December 26, 2016. However, while UPS Air services will be increasing an average of 4.9%, FedEx Express rates will only be increasing an average of 3.9%. This is the first of many differences between the announced changes from the two major carriers.

FedEx will also be lowering the dimensional (DIM) divisor to 139 for domestic shipments, matching the divisor currently used for international shipments. Many shipments that were not previously charged at the DIM weight will now be affected, which will have a significant impact on overall shipping costs. In 2011, the dimensional divisor decreased from 194 to 166, and in 2015 both FedEx and UPS began applying DIM weight pricing to all ground shipments. At this time, UPS hasn’t announced any changes to its DIM weight pricing.

In addition, FedEx announced a change to its fuel surcharges. Effective February 6, 2017, the fuel surcharge percentage will be subject to weekly adjustment, rather than monthly. There’s currently a two month lag time between the US government fuel indexes and the fuel surcharges. This change will better align them by reducing the lag time to two weeks.

As a shipper, it’s important to understand how these changes will affect you and your business. As we’ve done in past years, Partnership will conduct a full analysis to help you make sense of these changes. Be on the lookout for our white paper on the topic before the New Year!

In the meantime, it's important to start evaluating how you can combat these rises in shipping costs. Through a PartnerShip-managed shipping program, you receive significant discounts on select FedEx services - resulting in savings that can offset these rate increases. If you're not sure if you qualify for one of our small package shipping programs contact us and we'll find the solution that's right for you.

FedEx currently applies an additional handling surcharge to packages with a length greater than 60 inches, but after June 1 the threshold will be lowered to 48 inches. This announcement came during the FedEx third-quarter earnings call and is in response to recent e-commerce trends. More consumers are shopping online, which has led to an increase in home deliveries and an increase in non-traditional items being shipped, such as big screen TVs, mattresses, and swing sets.

The additional handling surcharge currently costs $10.50 per package, so it’s important to take a look at the size of packages you send and receive. If a lot of your packages are greater than 48 inches in length, you will see a significant jump in your costs.

It’s also important to note some of the other criteria from the FedEx service guide that would cause a package to be charged the additional handling surcharge. This surcharge also applies to any Express or Ground package that: 

• measures greater than 30 inches along its second-longest side
• has an actual weight of greater than 70 lbs
• is not fully encased in an outer shipping container
• is encased in an outer shipping container made of metal or wood
• is cylindrical, including (without limitation) cans, buckets, barrels, drums or pails that are not fully encased in an outer shipping container made of corrugated cardboard

The rise of e-commerce has caused a considerable amount of change in small package shipping in the past few years. Carriers are constantly adjusting service costs to address market trends. In 2015, FedEx and UPS began applying DIM weight pricing to all ground shipments as opposed to just those three cubic feet or larger. Prior to the 2016 rate increases and just in time for the holiday volume, the charge for oversized packages nearly doubled to $110. In addition, UPS instituted a 2.5% surcharge for third party billing service in response to the growing popularity of drop shipping. As the e-commerce sector continues to thrive we can expect to see more changes like this in the future.

Update: On May 6, 2016 UPS announced it will follow suit with FedEx and reduce its maximum length for the Additional Handling charge. Effective June 6, 2016, UPS Ground packages exceeding a length of 48 inches will be assessed the fee.  

It's important to start evaluating how you these changes will affect your shipping costs. Through a PartnerShip-managed shipping program, you receive significant discounts on select FedEx services - resulting in savings that can help to offset cost increases like these. If you're not sure if you qualify for one of our small package shipping programs contact us and we'll find the solution that's right for you.

Get ready to win! FedEx is giving PartnerShip customers a chance to win up to $10,000, plus over 100 other prizes, in the $25,000 Get Ready Sweepstakes. By enrolling in a PartnerShip-managed shipping program, association members will be automatically entered in the sweepstakes. If you are already enrolled in one of our programs, you simply have to register for the sweepstakes. Then you’ll have a chance to earn up to 51 additional entries.*

Imagine how you could invest in the success of your business with these prizes:

• $10,000 Grand Prize (1) 
• $1,000 First Prizes (10) 
• $50 Second Prizes (100)

Get started. Keep saving.
PartnerShip customers enjoy significant savings on select FedEx^® services. The program is free to join and there are no minimum shipping requirements. What’s more, you may be eligible for other special offers and promotions.

PartnerShip works with over 120 major trade associations, across many industries, to provide their members with time- and money-saving tools to help them be successful in all facets of shipping and logistics. If you belong to an association we work with, take advantage of our free shipping benefits today and get in on the $25,000 Get Ready Sweepstakes. If you're not sure if you qualify for one of our association shipping programs contact us and we'll find the solution that's right for you.

*Limit 52 total entries. NO PURCHASE NECESSARY. Void where prohibited. The $25,000 Get Ready Sweepstakes is sponsored by FedEx Corporate Services, Inc. Open to legal residents of the 50 United States and D.C., 18 or older and a member of an eligible FedEx Advantage® affiliate as of 1/3/16. Begins 1/4/16; ends 2/26/16. For rules, visit smallbusiness.fedex.com/get-ready-rules.