UPS to raise rates by around 5 percent later this year
Oct. 16, 2015
ATLANTA (AP) — UPS is raising ground, air and freight rates by averages of around 5 percent 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 percent, and on Dec. 28, rates on ground shipping will increase 4.9 percent and air and international services will rise about 5.2 percent.
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 labor 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 percent to 5.25 percent on Nov. 2. For air and international packages, the surcharge will go from 3 percent to 4.5 percent.
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 percent 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 percent 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 percent, 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 percent in 2015.