Rocky Mountain Trucking LLC

UPS Inc. has raised its 2023 rates by 6.9% on its SurePost product, a last-mile delivery program it manages in conjunction with the U.S. Postal Service.

The increase, which takes effect Dec. 27, matches the 6.9% across-the-board general rate increase that UPS (NYSE: UPS) announced last month. It also matches the 6.9% increase that rival FedEx Corp. (NYSE: FDX) imposed on its Ground Economy product., which targets the same customer base as SurePost. That increase takes effect Jan. 2.

The FedEx product doesn’t operate the same way as SurePost. Both target high-volume merchants looking for low-cost shipping and with customers typically willing to accept deliveries within three to five days.

Under the SurePost service, UPS tenders parcels to the Postal Service for last-mile deliveries to residences. The Postal Service offers low rates to users of its last-mile product, Parcel Select. The agency also delivers parcels to every address and post office box, meaning merchants get full geographic coverage at cheap prices. This, in turn, gives merchants leeway to offer free shipping without it taking major bites out of their shipping budgets.

The FedEx Ground Economy service, by contrast, moves entirely on the FedEx network from pickup to delivery. For years, FedEx had a similar service to UPS, which was called SmartPost. In early 2021, FedEx completed a multiyear project to migrate those volumes into its own network. 

At its peak, the SmartPost service tendered 3 million parcels per day to the Postal Service.

Along with the SurePost rate increase, UPS has added fees to certain packages moving under the service. It will apply a “non-standard cube charge” to any package with combined length, width and height of more than 2 cubic feet. 

UPS will introduce a “non-standard length charge” to any package with its longest side measuring more than 22 inches but not more than 27 inches. It will also apply a “non-standard extra-length charge” to any parcel whose longest side exceeds 30 inches.

The new surcharges take effect March 26.

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