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Navigating Carrier Rate Hikes with Your Shipping Partner
With the holiday shopping season now in full swing, multichannel retailers hardly have a moment to breathe, let alone consider thinking ahead for next year. While retailers will want to tally up their holiday scorecard after the end of the holiday shipping rush, they should also be nailing down their shipping budget for next year. And one factor has the potential to ratchet up their budget exponentially -- carrier rate hikes.
While we’ve written previously on how the right shipping partner can help keep retailers keep costs down, retailers should also know that the right shipping partner can help mitigate carrier rate hikes.
Knowledge is Power
Knowing is half the battle, and an informed shipping partner should be able to keep you abreast of the newest rate hikes from all major carriers. FedEX and UPS typically announce changes to their pricing structures around this time.
This year, UPS customers can expect a 4.9 percent rate hike U.S Ground, Air and International shipping starting December 26. UPS Freight shipping saw a 4.9 percent increase starting September 19.
FedEx this year announced changes to their dimensional weight pricing, introducing an additional handling surcharge for Air and International packages with sides in excess of 48 inches. This represents a 12-inch drop from the existing cut-off. Customers will also see handling charges increase by 35 cents, with adjustments calculated weekly rather than monthly.
OSM partners with the United States Postal Service. If approved by the Postal Regulatory Commission, USPS will see moderate increases for Priority Mail by 3.9 percent, with an average increase of 3.3 percent in Priority Mail Retail prices starting January 22, 2017. And for their more competitive products, the rate for Parcel Select will increase by 4.9 percent and USPS Parcel Select Lightweight will increase by 8 percent.
A retailer’s choice of shipping partner will impact the effect different carrier rate hikes have on their operation. For example, OSM’s partnership with USPS typically means retailers will face pricing that is competitive and market-dominant, but that does not necessarily increase at the same rate as other carriers.
Preparation is Key
The best time to evaluate your shipping partner is during carrier rate increase announcements. OSM equips retailers with a unique network that offers efficient shipping. We can also negotiate with USPS to offer special rates to mitigate some of the cost of rate hikes.
Smart retailers will look for ways to mitigate carrier rate increases, but of course it is always wise to start off on a good foot with a shipping carrier that is not only privy to this information, but that is proactive about it.
Having a shipping partner with access to a premium shipping network can help cushion the price increase of carrier rates. Major carriers are now instituting considerable changes in how they calculate DIM pricing, which is sure to ratchet up prices. And with a fuel surcharge rate that is now calculated every week for carriers like FedEx, retailers could see their bill fluctuate substantially.
A Partner is an Advocate
If retailers establish standardized shipping paths and patterns with your shipping partner, especially if they partner with USPS, they can wind out much of this uncertainty, helping them establish a realistic budget and stick to it. An attentive shipping partner will tune retailers into the methods that will allow them to offer packages at a better rate.
And a savvy shipping partner will work internally every year to mitigate the rate increases. This may be as simple as repackaging, especially when a package is on the cusp of 12 ounces. Those few ounces over can make a big difference. Or it could mean shipping partners negotiating directly with the carrier, which is USPS in OSM’s case.
As the e-commerce landscape continues to change and grow, shippers must continue to evolve to meet the needs of online retailers, and retailers need a partner who can keep them looped in and adapt on the fly.