Shipping Feature: Delivering a Profit
In light of rising costs for parcel delivery services, what are the best practices that e-commerce companies reliant on the parcel providers can employ? Consider the following:
Dealing With Rising Shipping Costs at FedEx and UPS
By now, many FedEx and UPS customers are feeling the impact of 2015 pricing changes. In case you missed it, here's a recap: First, published rates took a general rate increase in January, with average increases of 4.9 percent for ground services, and two-day to three-day air services shooting up more than 7 percent.
As if those increases weren't hard enough to swallow, FedEx and UPS changed the way they charge for ground services in 2015. Last year, these carriers only applied dimensional pricing if a ground package's volume exceeded three cubic feet; otherwise, pricing was based on the actual weight of the package. This year, however, the carriers apply dimensional weight pricing to all ground packages. Affected packages increased another 17 percent (on average).
In addition, both FedEx and UPS changed the tables used to calculate fuel surcharges, increasing the costs by 4 percent. The compound effect of all of these increases is staggering, making 2015 the most significant rate increase in history. Good for FedEx and UPS shareholders, but very challenging for shippers!
While parcel shipping costs are in fact significantly higher in 2015, the current parcel marketplace is abounding with opportunities. Regional parcel carriers, postal consolidators and the U.S. Postal Service each represent terrific alternatives for shippers to not only reduce costs, but also potentially improve service.
Evaluate Regional Parcel Carriers
As parcel shippers contend with the dual challenge of rising shipping costs and fewer carrier options in the U.S. market, many are being forced to find lower-cost shipping alternatives to FedEx and UPS. Regional parcel carriers like OnTrac, Eastern Connection, Spee-Dee, LaserShip, PITT-OHIO, LSO, UDS, Courier Express and others offer multiple shipping solutions to complement UPS and FedEx air and ground deliveries.
Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Rob has helped some of the world’s most recognizable brands reduce parcel shipping costs an average of 25 percent through contract negotiations, rate benchmarking, modal optimization, invoice audit and other savings vehicles. A cum laude graduate of UCLA, Rob has 20 years of transportation industry experience, including executive positions at DHL and Stamps.com, in addition to his work as an outside consultant since 2001.
