UPS Inc. has increased its 2023 rates by 6.9% for its SurePost product, a last-mile delivery program it manages in partnership with the US Postal Service.
The increase, which goes into effect on December 27, is in line with the 6.9% overall rate increase announced by UPS (NYSE: UPS) last month. This also matches the 6.9% increase reported by competitor FedEx Corp. (NYSE: FDX) for its Ground Economy product, which targets the same customer base as SurePost. This increase will take effect on January 2nd.
The FedEx product does not work like SurePost. Both target high-volume merchants looking for low-cost shipping and customers who are typically willing to accept deliveries in three to five days.
As part of the SurePost service, UPS hands over packages to the postal service for last-mile deliveries to individuals. The postal service offers low rates to users of its last-mile product Parcel Select. The agency also delivers packages to any address and PO box, giving traders full geographic coverage at great prices. This, in turn, gives merchants the ability to offer free shipping without significantly impacting their shipping budgets.
The FedEx Ground Economy service, on the other hand, moves entirely within the FedEx network from collection to delivery. For years, FedEx had a similar service to UPS called SmartPost. In early 2021, FedEx completed a multi-year project to migrate these volumes to its own network.
At peak times, the SmartPost service delivered 3 million packages per day to the post office.
Along with the increase in SurePost rates, UPS has added fees to certain packages carried on the service. A “non-standard cube fee” will be charged for any package with a combined length, width, and height greater than 2 cubic feet.
UPS charges a “Non-Standard Length Fee” for any package whose longest side is more than 22 inches but not more than 27 inches. Also, any package whose longest side exceeds 30 inches will be subject to a “non-standard oversize fee.”
The new surcharges will come into effect on March 26th.