Every year around this time, we will see a press release or social media post explaining the upcoming increases to carrier rates and fees. Historically, you would see an approximate 5% shipping rate increase announced by FEDEX, UPS, and DHL. But in recent years, and now especially coming in 2018, base rates are not the only changes to affect shippers negatively.
RESIDENTIAL SERVICES ARE MOST AFFECTED BY CHANGES NEXT YEAR
FEDEX and UPS are announcing changes to weight calculations for SmartPost and SurePost services respectively. FEDEX now will be using the dimensional or volume weight formula the same as they use for ground and express services. Currently SmartPost was a favorite for online sellers of smaller boxes generally under 10 lbs. With SmartPost, shippers also are not charged the residential fees you would be as with Home Delivery or Ground services. What’s better, the current rate is based on the actual weight of the package. Although there are limits and extra fees that could apply, this service was ideal for E-commerce shippers of smaller boxes especially to residences.
What does the mean in terms of a shipping rate increase? In some cases, this can more than double the billable weight and cost of a shipment. Online sellers will need to recalculate their box sizes to see the impact before this change takes place at the end of January 2018.
UPS ALSO INCREASING RATES AND FEES
Not to be left out, for their SurePost service, UPS is also changing their dimensional divisor down from 166 to 139 for shipments under one cubic foot. Again, E-commerce shippers using SurePost will have to check to see the impact of this change which could result in an additional 15-20% increase on top of the base increase announced for 2018.
In addition to these changes, both carriers are increasing their fees for Delivery Area Surcharge (DAS) up to over 8% increase from current fees. This is not good news for online sellers primarily shipping to residences.
WHAT CAN ONLINE MERCHANTS DO TO STAY AHEAD OF THESE CHANGES
So, what can shippers do to offset these increases? Well, exploring alternate services is one option. USPS and DHL both offer residential services at favorable rates despite their own increase for 2018. The problem is there are restrictions as far as package sizes and in some cases, requirements for daily shipment volume.
Unfortunately, for smaller Amazon, eBay, and other online merchants, negotiating shipping rate and fee concessions are not easy. Some good news is companies such as Sologistx, can help analyze your product and shipping profile to find the best solutions to keep costs low and maintain transit time requirements. In many cases, the solution could be a blend of services, which is better managed utilizing a third-party company like Sologistx who also offer shipping technology to best process order shipments seamlessly.