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Page 10

SUPPLYCHAINSUCCESS

DELIVERY AREA SURCHARGES SET TO BECOME LESS RURAL IN 2020

Chart 1

By Keegan Leisz

Chart 2

W

ith the start of 2020 upon us, the UPS and FedEx general rate increases are impacting shippers’ transportation spend. This year, as with years past, UPS and FedEx increased the price of their transportation services as well as some key accessorial charges. However, in addition to the rate changes, both national carriers announced significant changes in how they would classify two accessorials: Delivery Area Surcharge (DAS) and Delivery Area Surcharge – Extended (EAS). These accessorials are assessed based on the service level and the destination ZIP Code of a shipment. In the national carriers’ GRI announcements, each carrier announced they would be adding about 1,500 ZIP Codes, changing the classification from DAS to EAS or vice versa for about 2,500 ZIP Codes, and removing about 800 ZIP

10 PARCELindustry.com  JANUARY-FEBRUARY 2020

Codes from these lists. This is the first time in several years that more than a handful of ZIP Code have changed. These changes should leave shippers with three questions: 1. Are these changes meaningful? 2. How will they impact costs? 3. What should we expect going forward? The impact of the changes to the DAS and EAS ZIP Code list is much more difficult to determine than the typical rate increases, and likely will impact shippers differently based on shipping patterns. However, the US Census population data from 2017 can be used to figure out what portion of the US population was in a DAS or

EAS ZIP Code before and after the changes. This should give a macro level view on whether these changes are meaningful. See charts 1 and 2 for this analysis. Based on these results, the population that is in a DAS or EAS ZIP Code increased by about 9.65%. While 9.65% may seem like a meaningful increase, it does not definitively answer the cost question since the EAS coverage, which is the more expensive of the two charges, decreased. In order to determine the cost impact, a frequency of each charge needs to be calculated. For the purposes of this analysis, the population in a DAS/ EAS ZIP Code divided by the total US population

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PARCEL January February 2020