UPS raises freight rates, seeks more revenue
Spokesman Steve Gaut said UPS needed the increases to cover rising labour and equipment costs
Exporting & Importing
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ATLANTA—UPS is raising ground, air and freight rates by about five per cent as it seeks to boost revenue that has stagnated this year.
The Atlanta-based package delivery company said Thursday that on Oct. 26 freight rates will rise an average of 4.9 per cent, and on Dec. 28, rates on ground shipping will increase 4.9 per cent and air and international services will rise about 5.2 per cent.
United Parcel Service Inc. spokesman Steve Gaut said some large shipping customers or retail consumers could see larger or smaller increases than the averages, but he declined to give specifics. He said UPS needed the increases to cover rising labour and equipment costs and to be compensated fairly for its services.
UPS will also boost surcharges for fuel and heavy packages. The fuel surcharge on ground shipments will rise from its current 4.75 per cent to 5.25 per cent on Nov. 2. For air and international packages, the surcharge will go from 3 per cent to 4.5 per cent.
The fuel surcharges change monthly and are pegged to diesel and jet fuel prices. As a result, lower energy prices hurt UPS revenue, which was flat during the first six months of 2015 after rising 5 per cent in 2014.
But cheaper fuel dramatically lowers the company’s costs and has helped it boost profit.
In the first half of this year, net income surged to $2.26 billion, up 65 per cent from the same period last year, when results were hurt by a $665 million charge related to health plans. The company has saved $669 million, or 34 per cent, on its fuel spending this year compared with the first half of 2014.
Shares of UPS closed at $103.80, up 94 cents. In extended trading after the rate increases were announced, they were up 20 cents more to $104. The shares have dropped 7 per cent in 2015.