USPS, FedEx & UPS Jacked Up Prices. Here's The Cheapest Way To Ship
USPS Shipping Rate Increases and Service Issues
Overview of Recent USPS Changes
- USPS announced an emergency 8% surcharge on all packages, compounding a previous rate hike from January, leading to a total increase of 14-16% for e-commerce sellers.
- The speaker expresses frustration over the declining quality of service despite increased costs, noting their extensive experience in shipping.
Details on Rate Hikes
- The January 18th increase raised Ground Advantage rates by approximately 7.8% and Priority Mail by about 6.6%, with lighter packages under one pound facing nearly a 12% increase.
- A second round of increases was approved on March 25th, introducing another 8% charge on various services effective April 26th.
Financial Struggles of USPS
- USPS is experiencing significant financial difficulties, having cut around 10,000 jobs through early retirement programs and reviewing leases for retail locations that are not profitable.
- Performance metrics reveal that out of 27 service categories, only seven met performance targets in the past year; package delivery rates are trending downward.
FedEx and UPS Rate Increases
FedEx Challenges
- FedEx implemented a general rate increase of 5.9% as of January 5th for the third consecutive year while suspending money-back guarantees since December 1st, impacting customer recourse for late deliveries.
- Current non-peak delivery rates show that nearly one in twenty FedEx packages do not arrive on time.
UPS Comparisons
- UPS also raised rates by 5.9%, but maintains a higher on-time delivery rate at approximately 97.4%, compared to FedEx's lower reliability.
Dimensional Weight Changes Impacting Costs
New Rounding Rules
- Both FedEx and UPS altered dimensional weight rounding rules in August, causing potential increases in billable weights by up to 20% due to new rounding practices.
Cost-Saving Strategies for E-commerce Sellers
Cheapest Shipping Options
- For packages under five pounds, using USPS Ground Advantage via third-party platforms like ShipStation offers significant savings compared to retail rates at post offices.
Negotiation Tips
- If negotiating with carriers like UPS or FedEx is possible (especially if shipping volumes exceed certain thresholds), it can lead to better pricing options such as UPS Ground Saver or FedEx Ground Economy.
Delivery Speed Considerations
Flat Rate Box Utilization
- For expedited shipping needs (2–3 days), utilizing USPS flat rate boxes can be cost-effective for heavier items due to fixed pricing regardless of weight within limits.
Custom Rates Negotiation
- When items exceed flat-rate box dimensions or weight limits, negotiating custom rates with carriers becomes essential for cost efficiency.
Reliability Metrics and Customer Service Implications
On-Time Delivery Rates Comparison
- UPS: On-time rate at 97.4%
- FedEx: On-time rate at 94%
- USPS: National package on-time rate dropping to 92%
Customer Service Costs
- Late or missing shipments result in increased customer service interactions which can consume significant time and resources without being reflected in carrier invoices.
Long-term Strategy Recommendations
Building Costs into Pricing
- To maintain healthy margins amidst rising shipping costs across all carriers (14–16%), businesses must incorporate fulfillment costs into product pricing rather than absorbing them silently.
Action Items:
- Set up a ShipStation account to compare current shipping rates against commercial options (see here).
- Initiate conversations with your carrier representatives regarding custom rates if you ship more than one pound regularly (see here).
- Review checkout shipping charges relative to actual costs; adjust prices accordingly (see here).