By Jonathan S. Reiskin, Associate News Editor This story appears in the Nov. 26 print edition of Transport Topics.
UPS Inc. will increase its rates for parcel shipping by 4.5% for air-express packages and by 4.9% for ground delivery, effective Dec. 31.
The largest freight transportation company in North America, UPS, Atlanta, said Nov. 16 that the net increases are combinations of higher base rates and reductions in fuel surcharges.
Separately, TNT Express, which has agreed to merge with UPS, said it has arranged to sell its cargo airline to a Belgian-Irish company.
For air-express shipments, UPS said base rates would rise by 6.5% while the corresponding surcharge declines by 2 percentage points. For ground delivery, the increase is 5.9% for base rates, but the fuel surcharge drops by one point.
In addition, the company’s Next-Day Air, Second-Day Air and Three-Day Freight will rise by 4.9%. UPS said more details are available on the company’s website.
“List prices are only one component of total prices,” stock analyst Benjamin Hartford wrote to clients of Robert W. Baird & Co. “After accessorial charges and discounting, the competitive nature of the parcel industry ultimately sets the market price.”
Hartford said last year’s air-express increase was higher at 4.9%, while the increase for ground shipping remained the same.
In September, FedEx Corp., UPS’ main competitor, said it would increase air-express rates by 3.9%, net, in the form of 5.9% higher base rates and a two-point reduction in fuel surcharge.
FedEx did not announce increases for its Ground division at that time but said it would do so on Dec. 14.
TranzAct Technologies, which provides technology and services for shippers, told its customers after the UPS announcement, “People who set their annual budgets based on the announced averages will again find they run out of budget before they run out of year. Actual increases by service level, zone and weight vary, in some cases greatly, from the announced average.”
On the international side, Dutch delivery service TNT Express said Nov. 16 that it has agreed to a conditional sale of TNT Airways and Pan Air Lineas Aereas S.A. to ASL Aviation Group, with the sale to be effective immediately prior to the completion of the proposed UPS-TNT deal.
The airline transaction is necessary for the European airlines to comply with European Union regulations, said stock analyst David Ross. Ross told clients of Stifel, Nicolaus & Co. that TNT has been looking for a buyer for the airlines since they announced their merger plans in March, and that the sale is similar to what DHL had to do in the United States when it purchased Airborne Express in 2003.
UPS has said it expects the TNT deal to close in early 2013.
