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Shipping: Say Hello to Rate Hikes

Shipping costs are up, but don't let that get you down--it's not all bad news.
Magazine Contributor
3 min read

This story appears in the February 2002 issue of Subscribe »

If your homebased business relies heavily on shipping items to your customers, you may have noticed the change in rates recently enacted by most of the major carriers for 2002, including DHL, FedEx and UPS. If you've had your account for more than a year, you know rate increases are nothing out of the ordinary, but this year's rate increases particularly target home and residential area shipments. If your business ships primarily to customers' homes, you'll see the biggest changes in your bill.

The good news is, after a year when fuel prices skyrocketed and most carriers implemented a fuel surcharge--by some estimates, the first time in 20 years--most carriers have come up with some form of sliding scale; if fuel prices continue to go down, so will the fuel surcharges, and vice versa. DHL recently lowered its fuel surcharge by a flat 1 percent, bringing it down to 3 percent, and UPS just implemented an index-based fuel surcharge that's based on the U.S. Energy Department's On-Highway Diesel Fuel Prices. The index will change the first Monday of every month, and you'll be able to check on fuel index changes online at

Learn More

Hunting for a good homebased business organization to join? See "The Benefits of Associations."

UPS raised its residential surcharges a nickel, to $1.05, but has now started adding that charge to air package shipments delivered in residential areas as well. FedEx Ground also raised rates--there's an average 3.5 percent increase per package, with a residential delivery surcharge increasing to $1.35, from $1.30. FedEx Home Delivery also increased its surcharge a nickel per package, to $1.10. FedEx has, however, moved away from charging a flat 4 percent fuel surcharge on air shipments to one that is adjusted monthly based on the U.S. Gulf Coast Fuel Index, and the surcharge for December, for example, fell to 2 percent. FedEx hasn't ruled out another rate increase for 2002, but barring unusual circumstances, UPS expects rates will remain the same for the entire year.

So what's caused the rate increases? According to Steve Holmes of UPS, annual rate increases are standard in the industry and do not reflect costs for beefed-up security. "We deal with these issues every day anyhow, and we're constantly shifting with security regulations around the world," says Holmes. "We do that through technology."

So how can you save money on rising rates? Rene Chapin with the National Association for the Self-Employed suggests homebased business owners join organizations such as NASE to receive discounts on delivery services. NASE, for instance, offers 31 percent off Airborne Express' flat rates on overnight service, and most homebased business associations offer similar discounts. Look for those organizations whose benefits outweigh the cost of any annual membership fees.

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