UPS rates skyrocket

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

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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."