If you’ve been watching shipping costs lately, or are a professional in a business which regularly ships goods, you might have noticed that major carriers FedEx, USPS, and UPS all raised their shipping rates across the board in January of this year. And the USPS wasn’t slow to do the same, prompting many businesses to scramble and begin looking for other providers, or smarter solutions to their shipping needs. Among the most likely hardest hit will be small retailers and online shops which have shipping-critical operations.
Though oil is at the cheapest it has been in decades, the rise in shipping costs isn’t attributable or related to the cost of gas: but to the cost of space on shipping trucks, planes, and vehicles. Thanks to the wide variety of orders made online, many shipping channels are full, with few vehicles resting idle. Many industry leaders call this the ‘Amazon Effect’, or the increased volume of goods delivered to homes due to the larger availability of online shopping.
And in the age of online shopping, parcel volumes are increasing dramatically across many fields, increasing the complexity of doing business. Remote clients require shipping, and with an ever-higher volume of transactions happening online rather than in-person, shipping is becoming critical to fulfilling customer needs and staying competitive. However, it’s an increasingly uphill battle to manage these increasing costs… and upward-trending volume.
What Do Price Increases Look Like?
- UPS ground services increased an average of 4.9%, while air and international increased roughly 5.2%
- FedEx increased by 4.9% on all weight and dimension-priced items, and implemented a surcharge of up to $3.00 for residential delivery.
- USPS shipping services increased up to 9.5 percent depending on items, but exceptions include first-class and standard mail.
With the advent of increased online buying activity almost across the board, shipping has only become more important. In many cases, shipping can be crucial to business models. For individuals and business who might be substantially affected by increased shipping rates at many major providers, we have gathered a number of helpful tips and tricks to help optimize shipping operations to manage the likelihood of further cost increases.
Aggressively hunt for the best prices. Often, industry leaders have the clientele to more easily leverage price increases. But the big four mentioned above are far from the only shipping companies available to American businesses, and this is only truer the larger shipped items get. For example, you can get freight quotes online here.
Match your strategy to your client needs. If you can pare down the size or weight of the items you’re shipping, do so! Provide excellent service, but cut costs where it’s reasonable. If you tend to over-protect goods and add packing weight, consider trying a few rounds of less heavily packaged items. But don’t make the mistake of sacrificing quality! Eliminating wasted space or weight can dramatically reduce costs, especially where size of the parcel is concerned.
Capitalize on new technology. Several pricing tools exist which will show businesses the optimal carrier (by price) for specific packages. Utilizing such systems to ensure that every parcel is shipped as cost-economically as possible is highly recommended. Initiating carrier-pickup systems instead of delivery can save on some costs and ensure that there is more free to pay for increased shipping.
If you’re a business worried about shipping price increases, make a note not just to track oil prices. Many components and factors which go into calculating shipping have nothing to do with oil prices, and instead are related to (increasing) driver and pilot wages and machine operators, and to maintain increasingly complex equipment related to the shipping process. And even more worrying is a current and growing shortage of truckers to make long hauls.
So use the tips above and try to anticipate industry changes as much as possible. Using a box that’s only two inches shorter can often save as much as two dollars on shipping, and especially to small businesses, those savings add up.
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