Drowning In Rising Shipping Costs?

By Paul Johnson, President Complete Mailing Solutions


Both UPS and FedEx have announced their General Rate Increase (GRI) for 2017. For the first time, there are differences in how each carrier is approaching their increases. Here are some highlights of the changes shippers will encounter as well as some strategies on managing the increases.For the first time, UPS will be increase the majority of their 2017 rates on December 26th, which will impact shippers with post-Christmas returns.
 

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  • The basic rate increase that averages 4.9% (packages in the 1-10 lb range are typically higher).
  • UPS will now be assessing Additional Handling Surcharges on packages that are 48” or more ion the longest side (from t 60”) on Ground, Air, and International packages.
  • Additional Handling Surcharges will increase $.35 and will now also be applied to UPS’ more economical SurePost packages (packages that ship UPS but are delivered to their final destination by the USPS). The surcharge will go into effect on January 8, 2017.

View a 2017 rate overview here Rates at ups.com
 
 

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  • FedEx will increase their rates on January 2, 2017. The change reflects an average 3.9% increase on domestic U.S. domestic, import and export services.
  •  FedEx is changing their domestic dimensional weight multiplier from 166” to 139” (dimensional weight is calculated by multiplying the length x width x height then dividing by the multiplier – 139).
  • FedEx will adjust their Fuel Surcharge on a weekly rather than monthly basis. Industry experts suggest this indicates FedEx is anticipating higher fuel costs next year and want to reduce the impact on their revenue.

View FedEx 2017 shipping rates here 2017 Rates at fedex.com
 
 

  • The USPS has not announced a specific rate increase but has published tentative structural changes that would go into effect on January 22, 2017

View USPS proposed changes USPS 2017 Changes
 
 

When Does a 1-Lb Parcel Weigh 11 lbs?

No it’s not a trick question but it might depend on the date.

Dimensional pricing has had a significant impact on the cost of shipments because pricing is based on dimensions rather than weight. Essentially a 1-lb package is no longer a 1-lb package!

Consider this:

Cost Comparison of a 12” x 12” x 12” Package Weighing 1 Lb.
Carrier 2016 Billable Weight 2016 Rates – Price* 2017 Billable Weight 2017 Rates – Approx Price
FedEx Ground 11 lbs $15 13 lbs $20
UPS 11 lbs $18 11 lbs $19
USPS 1 lbs $7 1 lbs $7

As rates and surcharges steadily increase, it’s no longer feasible to be lax about how items are packaged and shipped.

3 Tips To Better Manage Rate Increases

It is now imperative that shippers more closely manage their shipments. Here are 3 tips to help you better control shipping costs:

  1. Optimize Package Contents and Packaging
    Package as many items in a single container as possible as well as use the smallest box possible to ship the products. This will not only reduce the cost of packing materials but the actual cost of the shipment.
  2. Rate-Shop All Shipments
    With the divergence of pricing strategies between UPS and FedEx, it is more important than ever to shop for the best rate (especially with weekly fuel surcharge adjustments at FedEx).
    Incorporate rate shopping tools such as NeoShip, ProShip, and EMS that not only identify the best shipping rate but provide greater visibility of your shipments progress.
  3. Dimensional Equipment
    Take the guesswork out of dimensioning each package and identify package size and pricing instantly with a dimensional scale that automatically calculates package dimensions

Contact us today for a Free Assessment of your shipping needs and more ideas on how to better manage them –303-761-0681.