The United Parcel Service—known colloquially as UPS—has raised shipping prices every year at an average rate of 3 to 5 percent. This is somewhat normal, following inflation rates and economic growth. However, despite the fact that UPS has been raising rates ever year, they have not, necessarily, shown any growth in revenue. Of course, it is easy to see how this might happen as the pressure for free shipping continues impact companies whose main focus is the transport of goods and materials.
More specifically, ground shipping for both FedEx and UPS have increased by 79.2 percent, over the last 10 years. Furthermore, air shipping rates have nearly doubled—increased 95.5 percent—over the last decade. Similarly, though, International shipping rates have also rising over the last year (or so) by nearly 5 percent, and UPS Air Freight rates in the United States, Canada, and Puerto Rico will rise by an average net of 4.9 percent, too.
Knowing this, then, it should not come as a surprise to most people that UPS expects to raise rates again this year. American consumers could find themselves paying an average of 4.9 percent more for US ground and air shipping the day after Christmas.
So you better get the most out of this year’s holiday shopping season!
This move could make an Amazon Prime membership yet more attractive—as it includes free shipping and a vast assortment of items available through the online marketplace—but, time will also tell if this price hike (and future price hikes) will affect the annual price of an Amazon Prime membership.
Most importantly, though, these price hikes might drastically hit small and independent businesses the most. As consumers find the cost of shipping moving higher and higher, they may be more likely to turn their back on small online businesses and towards cheaper products from Asia or massive marketplaces like Amazon.
Of course, time will tell how the gradual increase in shipping rates will influence not only businesses, but the consumers who keep them afloat. And with UPS’s share prices not increasing, it is clear that this move is not about profit, but about maintaining productivity.