Retailers are facing shipping price increases from major U.S. shippers the United States Postal Service (USPS), United Parcel Service (UPS), and FedEx, according to mail and shipping services company Pitney Bowes. Their most recent rate increases and rate plans are detailed in full here.
The USPS will increase pricing for commerce packages for volume customers by 9.5% on average next week, while UPS and FedEx have already raised their rates, including on the ground rates favored by many e-commerce retailers.
New dimensional pricing from the shippers, which takes into account parcel size as well as weight, mean that retailers have to be smarter about their logistics, and take care to choose right-size boxes, when they ship their packages.
Package delivery is getting more complicated and more expensive as e-commerce retail orders continue to surge.
E-commerce over the holidays grew 20% over last year by some estimates, and the surge in mobile sales is helping to drive growth. Logistics costs have already thinned e-retail and omni-channel margins, and the increased complexity and outright rate increases promise to shrink them further.
The latest price increases come in the face of pressure from consumers to keep delivery free or low-cost. Free shipping doesn’t seem to lead to sales, but there’s a fair amount of research indicating that it may help save them, including at the sensitive moment of online checkout.
A clear majority (66%) of consumers in a Harris Poll of 2,241 American adults said shipping costs are their “biggest online shopping pet peeve.” Some 81% said free shipping would make them more likely to shop online, and 70% said free returns would be an enticement.
But retailers are not accurately calculating how much their shipping policies are costing them, Jeremy Bodenhamer, CEO of logistics automation company ShipHawk, told Retail Dive last year. Especially with dimensional pricing, shipping costs have risen just as any wiggle room to charge shoppers for shipping has narrowed. But there’s a lot that can be done when it comes to tightening up the logistics of sorting and packaging orders, Bodenhamer said.