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UPS hikes domestic rates
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December 30, 1997: 6:11 p.m. ET
Fees on ground deliveries in U.S. and Puerto Rico will rise by 3.6 percent
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ATLANTA (CNNfn) - United Parcel Service of America Inc. announced a rate hike Tuesday that will affect most of its domestic shipments while leaving international delivery fees unchanged.
UPS, still the nation's dominant courier despite a crippling two-week strike last summer, said it will raise ground rates on most package deliveries in the U.S. and Puerto Rico by 3.6 percent. Air rates will rise 3.3 percent.
Under the rate increase, slated to take effect Feb. 7, residential ground deliveries will cost $1 more than those to commercial addresses.
UPS officials tried to play down the price increases, which come at a vulnerable time for the Atlanta-based shipping company as it struggles to win back customer confidence in the wake of last August's paralyzing strike.
"This rate adjustment is comparable to those of the past few years and is, in fact, less in most categories," Joe Pyne, UPS's senior vice president of marketing, said.
The strike cost UPS at least $600 million and contributed to a third-quarter loss of $10 million. By contrast, UPS reported a $340 million profit in the third quarter of 1996.
While volume is still below pre-strike levels, UPS said domestic revenues and profits for September had reached levels comparable to those of the same period a year before.
Pyne sought to cast the domestic increases against a backdrop of improvements in international services.
He cited reduced premiums -- from $50 to $40 -- for deliveries by UPS Worldwide Express Plus, and stepped-up guarantees for international shipments under an expedited delivery plan.
UPS's latest moves come as one of its fiercest rivals in the overnight delivery business, Federal Express Corp., is undergoing an expansion drive. In October, Federal Express announced the $2.2 billion acquisition of Caliber Systems Inc., which promises to ratchet the competition in surface shipments with UPS. Caliber Systems owns RPS Inc., a UPS competitor.
Federal Express also recently opened a southwest regional hub at Fort Worth Alliance Airport, part of a broad-based effort to extend its reach.
UPS, with 338,000 employees worldwide, reported revenues in 1996 of $22.4 billion on volume of more than 3 billion packages.
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