now this wouldn't be considered inflationary, would it? not in the new paradigm, at least...

any accountants out there care to address our apparent lack of inflation?

o)<

mike

link:

http://www.worldnetdaily.com/bluesky_exnews/20000207_xex_ups_rates_br.shtml

UPS rates skyrocket Costs for some services nearly doubling today

By Parker Chivers ) 2000 WorldNetDaily.com

Many of the 1.7 million United Parcel Service customers will be shocked today to learn that the cost for shipping certain packages has increased as much as 81 percent as the 2000 rate schedule goes into effect.

The only notice of the increase the shipping giant provided its customers was buried in the text on page 140 of the 152-page UPS 2000 Rate and Service Guide, distributed to customers in mid-January. Most customers are unaware of the change, but many of those who have stumbled upon it are furious.

The increase will apply only to certain types of packages, and is the result of a change to a long-standing policy regarding so-called "oversized" parcels. The term oversized refers to packages that, because of their bulky size, are billed at a higher rate.

Like most shipping companies, UPS bases its rates on the weight of a parcel, but at some point, volume must be taken into consideration, and when bulky, lightweight packages are shipped, the cargo is less profitable. To compensate for this, UPS years earlier implemented an "oversized" policy. Under this long-standing policy, if a package's dimensions (length-plus-girth) exceeds an 84-inch limit, it is billed at the rate of 30 pounds, or the actual package weight, whichever is greater. With the policy change, UPS has created two classes of oversized packages, "Oversized 1" (OS1) and "Oversized 2" (OS2).

Under this new and virtually unknown policy, any package that has a length-plus-girth measurement between 84 and 108 inches (OS1) will continue to be billed at the greater of 30 pounds, or its actual weight. However, a package with a length-plus-girth measurement that exceeds 108 inches will now be classified as OS2, and will be billed at seventy pounds, or its actual weight, whichever is greater. The net result is an enormous price increase: A package shipped from New York to California that would have cost $18.42 under the old policy will now cost a whopping $33.43 under OS2, an increase of over 81 percent.

How are UPS customers reacting to this sudden and unannounced change in policy?

"This is an outrage," said Dale Lovejoy, a specialty farmer located near Pasco, Washington, "I can't believe that UPS would make such a drastic policy shift without telling anyone in advance. It shows a real lack of concern and respect for their customers. Most of my packages weigh between 18 and 26 pounds, and we could justify paying the 30-pound rate, but at the 70-pound rate? My customers just can't handle it."

Unfortunately, the problems the OS2 policy is causing UPS customers run much deeper than simply paying higher shipping rates.

"I have $12,000 worth of custom-made boxes that would suddenly become worthless thanks to OS2. All of a sudden UPS changed the rules, and they're too big, and paying the 70-pound rate would just kill us," said Lovejoy.

Ironically, Lovejoy had these boxes custom-built specifically for the purpose of satisfying UPS requirements. "These boxes were made exclusively for my UPS shipping," said Lovejoy, "I buy them by the semi-load to take advantage of volume discounts. If UPS had at least had the courtesy of giving us advance notice of six months or a year, I could have had them redesigned. But given no warning, I'd just be stuck with them. "

Like Lovejoy, countless other UPS customers and their suppliers will be left with huge inventories of worthless cartons. Other customers will be forced to rethink their entire packaging programs, breaking shipments that they had previously been able to send in a single carton into multiple components, each shipped separately. The redesigning of packaging can be a lengthy process, and, in the meantime, UPS will reap a windfall of profits from its unannounced policy change.

"Most people have no idea that this is happening," said Lovejoy, "and unless they happened to read it in the shipper's guide, they won't know until they get that first outrageous bill. What a surprise that'll be." The customers that stand to be hurt the most by the change are those that ship goods with a relatively low value-to-weight ratio -- bulky, inexpensive goods. This is because freight charges make up a large percentage of the total cost of these goods. But these costs must be passed along in turn, and in the final analysis, it is the consumer who will ultimately bear the burden.

When asked how he plans to deal with the problem, Lovejoy answered: "I've contacted FedEx, and they tell me that our packages can still be shipped with them at the 30-pound rate. We've been doing a huge volume of business with UPS, and FedEx was overjoyed at the prospect of winning our parcel business." Many other formerly loyal UPS customers will likely follow suit.

FedEx, considered by many to be UPS' chief competitor, joined forces with RPS two years ago, and since then the two companies have invested heavily into a steady expansion of their services. But competing with the brown behemoth is no minor feat: UPS is by far the world's largest parcel delivery company, with 330,000 employees, and boasts the delivery of over 12 million parcels per day.

"We were lucky we had an alternative," said Lovejoy. "Hitting their customers with such a drastic change with no advance warning just wasn't right. I just can't see how UPS can believe treating their customers like this will be good for business."

-- mike (mike@knuckledragger.com), February 07, 2000

Answers

Will this affect online shopping and mail order catalog companies? Time will tell.

-- Tim (pixmo@pixelquest.com), February 07, 2000.

UPS went public recently and the top execs got some tasty stock options, so one would think they're seriously focussing on "increasing shareholder value". Service quality (which doesn't necessarily boost quarterly earnings) is rather less important than maximizing revenues/earnings. Them's the breaks, UPS customers.

-- DeeEmBee (macbeth1@pacbell.net), February 07, 2000.

And how long do you think it will be before other shippers, including Fedex and the US Postal Service, significantly increase their rates because of escalating fuel costs. Of course, there's no inflation.....only heretics believe that.

-- Carl Jenkins (Somewherepress@aol.com), February 07, 2000.

1) New printer due in by UPS today! Hope it arrives...

2) I will continue to ship most of my packages by US Postal Service. I generally get very good service and some of the best rates (but it may take 1 day longer...).

-- Mad Monk (madmonk@hawaiian.net), February 07, 2000.

This price increase distributed in mid January was obviously decided before the increased fuel costs were even occurring. Will the prices increase again to reflect increased fuel costs? Brilliant, simply Brilliant. Now instead of one large package weighing 30 pounds, the shipper will send 2 smaller packages weighing 30 pounds with twice the number of packages to be handled by UPS. This reminds me of the U Haul truck where you rent the $15,000 truck for $29.95 per day and the $100 handcart to move the refrigerator for $10 per day. It don't make sense. It takes high paid executives to make these kinds of decisions. Me and Curly just don't understand this stuff.

-- Moe (Moe@3stooges.gom), February 07, 2000.

Good post Mike. Thank you.

-- Dee (T1Colt556@aol.com), February 08, 2000.

Shipping rates for mailorder have already climbed to follow suit. Some companies rip you a new one on shipping anyway (Access Micro comes to mind - they calculate shipping per item even if multiple items are sent in one shipment! I hit their website, picked a processor, RAM, and motherboard. $40 for UPS ground?!? $106+ for UPS blue (2nd day)?!? Ummm, no...)

Check your options carefully if you mailorder anything... Cheap parts + huge shipping often <= pricier parts + good shipping rates.

O d d O n e, who waits anxiously for the i820 motherboard he ordered from a co. with decent shipping rates...

-- OddOne (mocklamer_1999@yahoo.com), February 08, 2000.