UPS Planning to Raise Shipping Rates After Holiday Season

The rate hikes will be invested in service expansion and enhancements

UPS Planning to Raise Shipping Rates After Holiday Season
Image: UPS
September 2, 2016

As more and more shoppers choose to purchase merchandise online rather than in brick and mortar stores, freight delivery services have more and more work in delivering that merchandise.

Now consumers will have to pay slightly more to have it delivered by UPS.

The company is planning to raise the daily rate for U.S. Ground delivery, as well as for U.S. Air and International shipments, by an average of 4.9 percent. The latter includes deliveries between the U.S. , Canada, and Puerto Rico.

Fortunately, most consumers will not be affected during the upcoming holiday season: the rate increases will not go into effect until December 26. However, UPS Freight boosting rates, which will increase by the same amount, will be effective later this month.

"UPS continues to make investments in the speed, scope and coverage of our transportation network," the company stated. "Rate increases will support ongoing expansion and capabilities enhancements, while UPS strives to maintain the high service levels customers expect."

Delivery services have experienced greater demand as more consumers have turned to online shopping, and the dominant players at the moment are UPS and Federal Express. Unfortunately, as the costs of shipping rise, online stores will have to either absorb the increased costs or pass them to their customers in higher prices.

Most retailers separate shipping costs in online transactions, and those costs are paid by the consumer. The biggest exception is Amazon, which charges members of its Prime delivery service a flat fee annually for unlimited two-day shipping.

Amazon itself has been exploring the possibility of developing its own delivery service, including using aerial drones as couriers. However, it still has to overcome regulatory obstacles at the federal level before that will become a reality.