UPS Doesn’t Want Your Large Items in Its Small Parcel Network
A warning to shippers was sounded during the current UPS earnings report when it was asked to explain its strategy regarding balancing volume and price.
UPS Chief Sales and Solutions Officer Kathleen Gutman stressed the importance of continuously looking for pricing initiatives which align to revenue to cost to serve as well as the value UPS creates for customers. Ms. Gutman said, “We will continue to work on base rates and increase throughout the year as planned.”
The first step towards adjusting the base rates occurred on May 11, 2018, when a notice appeared on its Rate Change Announcement website stating:
Effective June 4, 2018, the fee for Over Maximum Limits and the Oversize Pallet Handling Surcharge will increase by $150 and a new Shipping Charge Correction Audit Fee will be added. The Audit Fee will be assessed if the average shipping charge correction in an invoice week is more than $5.00. The Audit Fee will be the greater of $1.00 per package subject to a shipping charge correction or 6% of the total amount of shipping charge corrections during the applicable invoicing period. Review the applicable UPS Rate and Service Guide starting on June 4, 2018 for further detail.
What does this mean for shippers?
If a shipper exceeds the above limits within UPS’ small package network, they will be assessed an Over Maximum Limits charge. Effective June 4, this penalty charge will increase by $150 for a total $650. Likewise, the Oversize Pallet Handling Surcharge will also increase by $150 if limits are exceeded for a total $650 hit.
Most shippers are aware that UPS calculates billed weight using a Dimensional Weight (DIM weight) calculation. However, most may not be aware that UPS also uses scanners and manual audits to measure packages going through their network. If the dimensions calculated using these methods differ from the dimensions entered at manifest, a “Shipping Charge Correction” is assessed. This new “Shipping Charge Correction Audit Fee” will be assessed if the average of these charges is more that $5.00.
UPS has been clear that they do not want oversize packages in their network and as a result they have exorbitantly increased the oversize charges. This is in an effort to prevent these packages from slowing their efficiency.
The Shipping Charge Correction Audit fee is one that is attempting to change shippers’ behavior. They don’t want to find these oversize shipments after they have already entered their network with an audit. They want shippers to be cognizant of the dimensional weight of packages in advance. If you don’t pay in advance for the billed weight you will be penalized.