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How to reduce increasing FedEx, UPS, and USPS rates

This is a guest post from Brian Gibbs of Refund Retriever. Brian founded Refund Retriever in 2006 while running his first eBay based business and seeing the shortcomings of other shipment auditing companies. Refund Retriever’s primary focus is FedEx and UPS parcel invoice auditing.

FedEx, UPS, and USPS increase shipping rates and alterations at least once a year. Here at Refund Retriever, we audit FedEx and UPS shipments for late deliveries and other billing mistakes. Accordingly, we have a working knowledge of shipping costs and how they affect you as a shipper. To begin, let’s look at the 2019 rate increases and provide some helpful advice to lower shipping spend.

2019 UPS General Rate Increase

The rates for UPS ground, air have increased an average net of 4.9% as of December 26, 2018. The total domestic rate increase came out to a 6.17% rise in shipping costs.

In addition to daily package rates rising, other changes will increase your shipping charges. Fuel surcharge now applies to Additional Handling, Over Maximum Limits, Signature Required and Adult Signature Required accessorial fees. These are in addition to the many accessorial fee increases covered here.

  • Additional Handling: $2.25 to $4.00 increase
  • Address correction: $0.50 increase
  • Large package surcharge – $15.00 to $25.00 increase
  • Over maximum limits: $200.00 increase

2019 FedEx General Rate Increase

Respectively, FedEx shippers saw rate increases as of January 7th, 2019. FedEx express increased shipping rates by an average of 4.9% for domestic and international services. Ground and Home Delivery shipping rates have also increased by an average of 4.9%. FedEx Freight shipping rates have seen the highest increase of 5.9% on average for services in North America.

In addition to the general rate increase, shippers also saw an increase in 56 accessorial surcharges. Small package services see 36 surcharge price increases and an additional 20 increases for FedEx freight. Here are a few of the most common accessorial fees and this year’s increase.

  • Additional Handling Surcharge (Dimension) $1.50 increase
  • Oversize Charge: $10.00 increase
  • Residential Surcharge: $0.20 to $0.25 increase
  • Address correction: $1.00 increase

2019 USPS Price Increase

USPS has some of the lowest postage rates and offers a great value in shipping. Unlike FedEx and UPS, the Postal Service does not add surcharges for fuel, residential delivery, Saturday delivery fees or peak-season delivery. 2019 includes a 5-cent increase in the price of a forever/1 oz. stamp, from 50 cents to 55 cents. This increase in the 1-oz stamp is the largest increase by percentage since 1991. Forever stamps were created in 2007 and are now the majority of 1 oz. stamps sold at the post office.

USPS is not technically run by the government and subsequently receives no tax dollars for operating expenses. The department relies on the sale of postage, products, and services to fund its operations and growth. The Postal Service lost $3.9 billion in 2018. Consequently, 2018 was the 12th year in a row the USPS reported a loss despite growth in package shipping.

How do you reduce shipping rates?

When it comes to saving time, increasing efficiency and reducing parcel spend, one person alone cannot accomplish these goals. The human touch combined with data and analytics, makes for a powerful combination of precise spend management. Analytics can quantify the true increase in shipping rates.

Therefore with eCommerce cost reduction, introducing analytics and automation into shipping strategy is a great way to begin reducing parcel spend. To begin, companies must identify past and current needs, opportunities, and weaknesses to ultimately deliver clarity when making informed decisions. To introduce this type of analysis of your shipping history, click here.

Contract Negotiation

Regularly reviewing carrier pricing agreements from UPS and FedEx are a must. Shipping contract negotiation is huge. FedEx and UPS announce rate increases annually – with UPS and FedEx both having an average rate increase for ground delivery of 4.9% in 2019 among various other increased accessorial fees.

Therefore, it’s critical to consider how these changes impact your business then identify what you can do to help negate these yearly increases. Shippers must evaluate service discount rates, accessorial fee impacts, zone and weight usage, and read the fine print of each agreement. Beware of provisions that may eliminate discounts or late delviery refunds.

Invoice Auditing – Late Delivery Refunds

Introducing a shipment auditing services takes very little time and yet gives you so much in return. In a nutshell, an auditing service gives you money back on shipments that are delivered late, unshipped, or duplicated. Any FedEx or UPS ground or express package sent is guaranteed to arrive on time of it’s free.

The best part is that a small parcel audit service, the fee is a small percent of refunds credits your business sees. Consequently, costing you nothing upfront and helping e-commerce cost reduction. This service is self-operating and easy to manage, allowing you to do what you do best – sell. To explore more about auditing services for your business, click here.

Automation and Package Characteristics

Labor cost increases and human-error factor into warehouse inefficiencies, therefore consider how technology or outsourcing can help fight increase shipping rates. Therefore, save your time and your employees’ time by introducing a 3rd party fulfillment. Similarly, drop-shipping select products from manufacturers to help reduce your time spent shipping. This will reduce the time spent on shipping efforts and free up time to strengthen selling strategies. Review Your Packaging Process

Take the time to review materials used to package inventory sold to automating your shipping process from start to finish. There are many options to consider when it comes to e-commerce cost reduction as part of your packaging process. To start, know your parcel size and weight.

Remember, all FedEx and UPS packages are now measured by dimensional weight. A few extra square inches multiplied by all packages per year could produce a large drop in your profits. In conclusion, packaging dimensions impact your bottom-line – plain and simple.

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