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FedEx and UPS pricing models no longer match up like the old days | Logistics Management

Martinez also noted that with this announcement FedEx did not match UPS’s rate increase, with FedEx taking a 3.9% increase on Express and International Export and Import products compared a 4.9% average for UPS, and the FedEx Ground minimum charge at $7.25 compared to UPS’s $7.32, along with the companies set to have totally different published rates for the first time in years.

Published rates no longer match, accessorials don’t precisely match, dimensional pricing rules don’t match, and fuel surcharges don’t match,” he said. “With all these changes, it is harder than ever for shippers to easily compare services and pricing between FedEx and UPS.  As all shipments will not be impacted in the same way, it’s important for shippers to understand to the differences between UPS and FedEx and thoroughly model the impact of all carrier pricing changes to their unique distribution.”

When asked about the pricing differences between UPS and FedEx, Jerry Hempstead, president of Hempstead Consulting, cited an old axiom bantered about in executive weeks along the lines of “in confusion, there is profit.”

And with these two companies seemingly setting new revenue and profit records each quarter, Hempstead said it speaks to how a shipper’s incumbent carrier has all the cards in a deal.

“They have the data on a customer’s book of business that delineates the usage by service type, by weight, by zone, with their profits coming out of the checking accounts of the customers of the carriers,” he said. “They know the number of transactions that go to residential addresses, they know the dimensions of the packages, and they know the proportion that goes to extended and delivery area surcharge zip codes. The carrier also makes the rates and determines the pricing offer.”

As for the impact of the pricing changes between the duopoly, Hempstead said shippers can ask their representatives at UPS and FedEx for an impact study of the announced changes, with the carrier representative able to provide an analysis for a shipper to the penny, in a matter of minutes.

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FedEx and UPS pricing models no longer match up like the old days – Logistics Management.

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