Making the Best of the 2019 Shipping Rate Increases

It’s that time of year again! Time for all e-commerce sellers to adjust to carrier shipping rate increases. UPS was the first carrier to roll out new rates, on Dec. 26, 2018; FedEx followed on Jan. 7, and USPS on Jan. 27. As in past years, this year’s changes include both:

• Across the board increases: FedEx and UPS raised their rates an average of 4.9 percent across all services, while USPS raised domestic package rates an average of 7.3 percent.
• Process changes: The big news this year is that USPS will be moving to dimensional pricing for packages of volume greater than one cubic foot, and is lowering its dimensional weight divisor from 194 to 166. Additionally, USPS is rolling out zone-based pricing for all First Class™ Package Service (FCPS) shipments.

Every year since 2015, ShippingEasy has been analyzing the shipping behavior of e-commerce sellers by looking at the anonymized data that flows through our software. Based on this analysis, here are some strategies that may help you mitigate the effect of this year’s increases on your overall shipping costs.

Revisit Your Carrier Relationships

Chances are you use USPS for at least some of your shipments. First, make sure you’re getting Commercial Plus® Pricing (CPP) — it’s easy to qualify, and CPP can save you 15 percent to 55 percent off USPS domestic retail rates.

If you use UPS and/or FedEx — both of which negotiate rates one-on-one with shippers — it pays to re-evaluate your agreements. Our data show that UPS and FedEx were chosen for more shipments in 2018 compared to 2017, which indicates they're getting more aggressive with their negotiated deals vs. USPS pricing. Assuming this trend continues in 2019, you may be able to mitigate the increases by renegotiating.

For examples of real-world shipping scenarios where changing carriers will make a difference for 2019 shipping costs, take a look at the case studies in the 2019 Shipping Rate Change Guide.

Optimize Your Packaging

Given the 2019 USPS dimensional pricing and FCPS process changes, nearly every shipper that uses USPS will find value in carefully evaluating their packaging.

For packages measuring more than one cubic foot in volume (L x W x H = more than 1,728 cubic inches), USPS is lowering its dimensional weight divisor to 166 from 194, meaning an increased number of packages will cost more to ship based on their dimensions rather than actual weight. If you use USPS to ship packages that exceed one cubic foot in volume, it pays now more than ever to look at reducing packing materials and/or using alternative box shapes to reduce the volume as much as possible.

For packages that don’t trigger dimensional weight rules, consider USPS flat-rate products. Every year our analysis finds opportunities for shippers to save money by using USPS Priority Mail Flat® Rate boxes and envelopes or Priority Mail Regional Rate® boxes. Flat-Rate products are available in over a dozen sizes and styles, and allow you to ship any content up to 70 lbs that fits into them to any zone for a single price; Regional Rate boxes come in two sizes which allow shipment of up to 15 lbs or 20 lbs for a zone-based rate, which is often lower than the weight-based rate for a custom-boxed package.

Reconsider Delivery Time Frames

Despite all the major carriers raising their rates for 2019, USPS CPP rates are still the lowest in the majority of shipping time frames — even compared to most of the discounted FedEx and UPS rates we analyzed. The caveat is that USPS doesn't offer a guaranteed two-day option; both its Priority Mail® and First Class™ Package Service (for packages less than 1 lb.) are advertised as one to three business day services. If you don’t need the two-day guarantee, these services can save you significantly. Even with the 2019 changes, FCPS commercial rates are less than half the lowest 1 lb. FedEx and UPS ground rates.

While some of your packages may take three days to arrive via these services, a similar number may arrive overnight. The USPS mapping tool makes it easy to estimate the delivery time for Priority Mail® packages.

It’s important to note that additional features of all Priority Mail® services include free Saturday delivery, free insurance, and free shipping supplies delivered directly to your door.

Conclusion

Year after year, our analysis demonstrates that every business — no matter its size or carrier relationships — has the opportunity to avoid the full impact of the annual rate increases by making better carrier, packaging and/or delivery timing decisions. We recommend viewing this time of year as an opportunity to kick off the year right with improved operational efficiency.

Christopher Vaughn is vice president of marketing at ShippingEasy, a provider of cloud-based shipping, inventory management, and customer marketing solutions for e-commerce sellers of all sizes.