UNLOCKINGTHE 2011

PARCEL RATE INCREASE

PARSING THE PRICING

“Luck favors the mind prepared.” Louis Pasteur

Effective Jan. 3, 2011

UPS

Nov 1

• UPS Air and International services will increase a net 4.9% through a combination of a 6.9% increase in rates and a 2% reduction in the UPS Air and International services fuel surcharge.

• UPS Ground services will increase a net 4.9% through a combination of a 5.9% increase in rates and a 1% reduction in the UPS Ground services fuel surcharge.

FedEx

Sept 29

• FedEx Express package and freight rates will increase an average of 5.9% for U.S. and U.S. export services. The rate increase will be partially offset by adjusting the fuel price at which the fuel surcharge begins, reducing the fuel surcharge by 2 percentage points

• Dec 3 ?????

• FedEx Ground and FedEx Home Delivery® rates will increase an average of 5.9%. The rate change will be partially offset by adjusting the fuel price at which the fuel surcharge begins, reducing the fuel surcharge by 1 percentage point.

HISTORY

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ARE INCREASES

NEGOTIABLE?

The Minimum Charge

• For Ground:

• Going from $4.84

• To $5.17

• For just about everyone $.33 a package + fsc

• 6.9%

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Where did the 5.9% go to?

ARE MINIMUMS

NEGOTIABLE?

UNDERSTANDINGAverages

How do they come

up with this

number

When you lay rates side by side you will see that the increase is not distributed

linearly

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Can anyone see a 5.9% increase in

these cells?

Guess why zone 2 is lower than the other zones

ANNOUNCING AN AVERAGE INCREASE IS

ELEPHANT SQUEEZE

ANYONE OUT THERE AVERAGE?

UNFORTUNATELYMost shippers don’t have shipments profiles that are equally weighted by zone

and by weight cellNor equally weighted across service types

Don’t assume FedEx & UPS have the same base rates

or that UPS increasing their rates by a greater percentage than Fedex makes them more expensive

This was 2010All depends on

the discount(s)You negotiated

Less but not so much

This is 2011

Again its possible, on your book of business that a 45% discount from UPS might be a better overall deal

than 50% from FedEx

Remember This ?Aug 2006 Announcement

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It was such a surprise to FedEx that they could not do the programing fast enough to implement the new

rule and had to wait months before they too could incorporate it.

Beginning January 3, 2011, the divisor used to calculate dimensional

weight will change.U.S. Domestic UPS Air services will change from 194 to 166.•U.S. Domestic UPS Ground services will change from 194 to 166 (applies to packages 3 cubic feet or larger in size). (1728 cu. in.)•Export services from the U.S. (all services) will change from 166 to 139. •UPS Standard to Canada will change from 166 to 139 (applies to packages 3 cubic feet or larger in size). •Import to the U.S. from Canada and Virgin Islands will change from 166 to 139.

Dimensional weight for international multiple package shipments will be based on the greater of the actual weight or dimensional weight of each package in the shipment

ARE DIMS NEGOTIABLE?

Most Popular Box Sizes

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I would hate to be these guys

Let’s pretend they get no discount or concessions

• I ordered 2 suits• Actual weight = 9.30 lbs. (so they charge for 10lbs )• From Texas a zone 5• The charge for 10 lbs. Resi Ground with a 5.5% fsc = $8.24

(They charged me $34 )• Becomes $8.78 Jan 3 (a 6.63% increase)• Dimensions are 18” x 15” x 25”• The dim goes from 35 lbs @ 194 to 41 lbs. @166 and the price

goes from $17.68 to $21.40• Or….wait for it…..21% more than they pay today for dim weight.• Please hold you applause. • Granted that even though the ad said “free shipping”, somehow I

was billed $34 for shipping so don’t feel too bad for JCP• If they do get a discount for the shipping from UPS then they really

made a fortune on my order.

By the way if you accept as the shipping date the shipment was delivered late and if JCP was smart

they would ask for a refund

If you have no data on your box sizes

• How are you going to know

• If you are going to be impacted

• And if so

• By how much

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Some of the accessorial surcharge changes

• The Address Correction charge for UPS Ground Services will increase $1.00.* Now air & ground are $11 for address correction.

• The charge for C.O.D (Collect on Delivery) will increase $0.50. (Currently $10)

• Delivery Area Surcharges will increase $0.15 for commercial addresses, and $0.25 for residential addresses.* The corresponding On-Call Pickup Area Surcharge will also increase $0.25 for residential addresses.* (currently - commercial =$1.70, resi $2.50, ext resi = $2.75

• The charge for Declared Value will increase $0.05 per $100 of the value declared, with a minimum charge of $2.25.

• The Residential Surcharge for UPS Ground and UPS Air Services will increase $0.25.* (currently Air= $2.50 Ground = $2.20)

• The Hundredweight Residential Surcharge will increase $2.00.

Accessorial’s negotiable ?

Total Zip’s 42011Now 56.5% has an extra fee

Delivery Area Surcharges will

increase $0.15 for

commercial addresses, and

$0.25 for residential

addresses.*  The

corresponding On-Call Pickup Area Surcharge will also increase

$0.25 for residential

addresses.*

The Delivery Area Surcharge for

UPS Hundredweight Service® will

increase $0.75.

IF YOU HAVE NO DATA

• On the frequency of the application of these surcharges on your book of business

• How are you going to know how much your employer is going to be impacted

• Mine your billing data

• Make you rep – give you an analysis

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Just remember these are averages

21

Just remember these are averages

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USPS• The Priority Mail Legal Flat Rate Envelope (15" x 9.5") and Priority Mail Padded Flat

Rate Envelope (12.5" x 9.5") are both priced at $4.95. All six types of Priority Mail Flat Rate envelopes will be priced the same as the regular Priority Mail Envelope (12.5" x 9.5") at $4.95, including the Gift Card Flat Rate Envelope, Window Flat Rate Envelope, and Small Flat Rate Envelope.

• Pricing for the Express Mail Flat Rate Envelope will remain unchanged at $18.30. • A new Express Mail Legal Flat Rate Envelope (15" x 9.5") is priced the same as the

Express Mail Flat Rate Envelope.• Overall price change of 3.5 percent for Priority Mail, new prices for Express Mail,

Global Express Guaranteed, Express Mail International, Priority Mail International, Parcel Select and Parcel Return Service will be effective Jan. 2. The overall price change for all Shipping Services products is 3.6 percent.

Priority Mail - Commercial Base

Weight Not Over (Pounds) L, 1 & 2 3 4 5 6 7 8Flat Rate Envs 12-1/2" x 9-1/2" or smaller $4.75 $4.75 $4.75 $4.75 $4.75 $4.75 $4.75Legal Flat Rate Envelope $4.95 $4.95 $4.95 $4.95 $4.95 $4.95 $4.95Padded Flat Rate Envelope $4.95 $4.95 $4.95 $4.95 $4.95 $4.95 $4.95Small Flat Rate Box $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00Medium Flat Rate Boxes $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50Large Flat Rate Box $14.20 $14.20 $14.20 $14.20 $14.20 $14.20 $14.20APO/FPO/DPO Large FRB $12.20 $12.20 $12.20 $12.20 $12.20 $12.20 $12.20

Zones

USPS

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Priority Mail - Regional Rate Boxes - Com Base

Boxes L, 1 & 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone 7 Zone 8A 4.97 5.08 5.58 7.15 7.83 8.36 9.37B 5.81 6.88 8.06 10.51 12.29 13.12 14.62

Zones

For shippers mailing regionally, an economical new Priority Mail Regional Rate Box featuring USPS-supplied packaging will be available in two sizes for Commercial Base and Commercial Plus customers. The Priority Mail Regional Rate Box offers zone-based pricing with the “If it Fits it Ships” concept and flat rates up to a maximum of 15 pounds for the cubic-size box measurement of .21 cubic feet (about the size of a large framed photo) and a maximum of 20 pounds for the cubic-size measurement of .41 cubic feet (about the size of a toaster). Volume thresholds for Commercial Plus customers have also been reduced.

Reality CheckSometimes We Miss the Obvious

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Guaranteed next day

2 to 3 days& Not

guaranteed

Pay Attention

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Not good news for shippers

27

DHLExits

domestic

Probably the largest un-announced increase facing shipping publicApril 23, 2010

April 23, 2010

Get your bill or reports electronically

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Data & this tool will help

determine how your employer

may be impacted

Paste mode

l in here

International

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HEMPSTEADCONSULTING.COMJerry Hempstead

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Next Steps

Call in your rep and ask for their impact analysis of their increase on your book of businessAnd their recommendation on how you can bet mitigate the increaseEVERYTHING IS NEGOTIABLE - NOWMany of the parcel consulting companies off a free impact analysis.You can do some approximation with the tool you saw displayed in this presentation.The tool is not perfect however it will provide a reasonable approximation without rerating every shipment.Is easy to use and fairly intuitive.