UPS Switches Express Delivery Pricing to Include Distance
Jan. 03, 1996
ATLANTA (AP) _ United Parcel Service said Wednesday it soon will begin charging air express delivery customers based on the distance a package will travel as well as its weight.
The new system means that prices for UPS Next Day Air will drop by as much as 40 percent in short-distance zones and prices for packages traveling longer distances will increase up to 28 percent.
Federal Express does not plan to follow UPS, said spokesman Tom Martin. But he said FedEx does offer some distance-based pricing on two-day service for select accounts.
American Airlines cargo, which does not ship door-to-door, already calculates prices based on weight and distance, said spokesman Ed Martelle.
Other competitors did not immediately return phone calls seeking comment on the change.
UPS said it is making the the change, effective Feb. 3, because it is moving to a network of regional hubs for air express, just as it uses for standard ground service.
Previously, the Atlanta-based UPS priced express shipments by weight only, the industry standard.
Under UPS' former prices, a letter sent from Atlanta cost $11.25. Under the new policy, the letter will cost $10.50 to send to Birmingham, Ala., $11.25 to Charlotte, N.C., $12 to Louisville, Ky., $12.25 to either New York or Dallas and $13 to Los Angeles.
A 5-pound package from Atlanta, which cost $21 under the former policy, will cost $17.50 to send to Birmingham and $27.25 to Los Angeles, according to UPS.
``We believe many customers will like the move and that distance-based pricing for air express will become an industry standard,'' said John Alden, UPS senior vice president for business development. ``Shippers are moving toward more regional distribution patterns that require flexible, more cost-effective distribution solutions.''
UPS also announced other price changes. Rates for standard ground shipments will increase an average of 2.9 percent for commercial deliveries and 3.9 percent for residential deliveries. Rates for UPS Next Day Air and UPS 2nd Day Air will increase about 4.9 percent. Rates for UPS 3-Day Select will rise about 3.9 percent. The increases are limited to deliveries within the continental United States.
Rates for sending from the United States overseas will increase 4.9 percent for UPS Worldwide Express, 6.9 percent for UPS Worldwide Expedited and 3.9 percent for UPS Standard Service to Canada.
UPS was among several shipping companies that said Tuesday they will continue collecting a federal excise tax that expired this week as a result of the congressional budget impasse. UPS, Federal Express and Airborne Freight said they plan to pocket the 6.25 percent cargo tax as part of their business expenses.