the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
Why Offering Free Shipping for Your Business is Easier Than You Think
12/13/2022 — Jen Deming
As a consumer, the words “free shipping” can create a huge incentive that pushes you to purchase. The expectation for most shoppers is that there will be some sort of free option. However, many retailers are still hesitant to offer free shipping, or stuck on how to make the choice available to consumers while still protecting their bottom line. Let’s take a look at the three most common misconceptions about offering free shipping, and how you can implement strategies to make it work to your business’s advantage.
Misconception #1 – Absorbing shipping costs will cut into my bottom line
If we’re really being honest here, it’s important to note that free shipping isn’t really “free”. Transportation services require time and effort from the carrier, so someone has to pay for it. If it’s not your customer, then it will have to be you. If not addressed correctly, you will have to absorb costs, and this will decrease your margins, overall.
The good news is that offering free shipping to your customer can have a major positive impact on your sales because it’s viewed as a huge value-add. In fact, most consumers are willing to spend up to 30% more online if they know they won’t be paying for shipping. As a top incentive, a further 93% of shoppers say they will take action to qualify for free shipping by adding more items to their order. By offering free shipping, you are going to boost sales and increase your average order spend. In time, the increase in revenue will ideally offset your shipping costs.
Pro tip: Set a minimum amount threshold to qualify for free shipping.
To make free shipping a viable strategy, it’s probably not smart to offer the service on just any order that is placed. Because shipping costs fluctuate, it can be hard to predict consistently. By setting a minimum order amount, you’ll help ensure that the revenue from the sale will offset the costs of transportation. Determine your minimum order value in advance, and be strategic about communicating that minimum amount during every step of checkout.
Misconception #2 – Building shipping cost into product price will scare customers
To counter the cost of shipping, it may make sense to increase your product price. But this can sound like a scary notion. Raised prices turn off customers and decreases your competitive advantage, right? The truth is, by increasing prices even minimally, while offering a high-value service like free shipping, you will see a boost to your net margin. 49% of all cart abandonment occurs due to sticker shock at the shipping point of checkout, not due to product price. Moderate price increases are generally justified by the customer, as long as fulfillment expectations are being met.
Pro tip: Product pricing should match what your customers are willing to spend and the type of customer you are trying to attract.
When building shipping costs into the price of your products, it’s always important to keep in mind who your target consumer base is. For example, a premium, brand-name shoe retailer can get away with a higher minimum price point than a book seller. Adding the cost of shipping into product price is a legitimate tactic that ensures you're covering your bases, just keep your price points fair and realistic.
Misconception #3 – The demand for free shipping isn’t there for my business
Unless you’ve been living under a rock, you know that free shipping has pretty much become the industry standard. Thanks to large ecommerce companies like Amazon, consumers expect shipping to be fast, free, or a combination of both. No matter whether you’re selling t-shirts or toolkits, the demand for free shipping is there for any industry. In fact, 66% of consumers want free shipping on all orders, regardless of the total, and 88% expect it when their order exceeds a certain amount. Even more alarming, 61% of shoppers say they are “somewhat likely” to cancel their order if free shipping isn’t offered – that’s a big old ‘yikes’. In short, when the majority of your consumer base expects some type of free shipping, it’s time to stop stalling and decide how to offer the service instead.
Pro tip: Explore ways to “test out” free shipping with offers and promotions.
You don’t have to jump right into a committed strategy right off the rip – dipping your toes in can help determine which tactics work best for you. Consider offering new customers, or rewarding existing ones, with a free shipping promotion. Implement VIP or loyalty programs that allow your customers to sign up and receive free shipping as an incentive. You may even benefit from offering free shipping on select items (perhaps those with a higher price point). By testing out different methods, you can really look at the shipping costs you incur, what your minimum order threshold should be, and refine your strategy from there.
Discounted shipping options help you and your customers
No matter which tactic you decide is best when offering free shipping to your customers, it’s extra important to keep your shipping costs low. You might not know that there are often shipping discounts available through memberships within trade associations, chambers, and industry groups. PartnerShip works with over 130 groups to provide their members with discounts on FedEx services. Contact our team to find out if you qualify.
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Your Essential Guide to the 2023 FedEx and UPS Rate Increases
12/06/2022 — Leah Palnik
FedEx and UPS will be increasing their rates by an average of 6.9% in 2023. That’s a heavy statement for a couple of reasons. First, this is the highest General Rate Increase (GRI) the carriers have taken in recent years. And second, your actual shipping costs will likely go up more than 6.9% in the new year. Oof. Unpacking the new changes is complicated, but essential if you want to understand how your costs will be affected and what you can do about it.
Here's your guide to the FedEx and UPS rate increases for 2023. Jump to:
- A look back at the FedEx and UPS GRIs
- Important changes
- How the FedEx and UPS rate changes will affect your costs in 2023
- What you can do to mitigate the effects of the FedEx and UPS rate increases
For 2023, both FedEx and UPS are pointing fingers at inflation as a contributing factor to the higher-than-usual rate increase. 2022 already saw an uptick with a 5.9% GRI, thanks to all of the supply chain disruptions and surges in demand that resulted from the pandemic. For several years prior to that, both carriers had been raising their rates annually by an average of 4.9%.
Some important quick facts about the new FedEx and UPS rates:
- The new FedEx rates take effect on January 3, 2023, while the UPS rates take effect a week earlier on December 27, 2022.
- The 6.9% average doesn’t take surcharges into account - many of which are increasing by more than 6.9%.
- How much your costs actually go up in 2023 will depend on several different factors. The services you use, your shipment dimensions and weight, and how far your shipments are traveling all have an effect.
If all of those tables and numbers are making your head spin, you're not alone. But there are some key takeaways. Let’s take a look at a few of the general observations from the base rate changes:
- Across all services and weight breaks, longer zones are getting hit with higher increases than shorter zones. Many of those increases are higher than the announced average.
- For Ground services, many of the rates for shorter zones are lower than the 6.9% average increase.
- For each service, the rate increases are similar across most weight breaks. Zones are the biggest difference-makers this year.
- For the 3 Day services, you'll see a higher increase from FedEx than UPS. However, the actual rates are comparable. That is because UPS took a larger increase with this service the previous year.
- Both FedEx and UPS have increased their Ground Minimum charge to $10.10
When you are reviewing your shipping costs, you can’t look at the base rates alone. Surcharge fees often make up a significant chunk of the amount you end up paying. Here are a few noteworthy surcharge updates:
- Fees for larger, more difficult to move packages continue to rise to hefty prices. You could be paying an extra $1,150 for a shipment that qualifies for the Unauthorized Packages fee by FedEx or the Over Maximum Limits fee by UPS.
- Both carriers are increasing the late payment fee from 6% to 8%.
- FedEx created a Remote Delivery Surcharge. Almost 4,000 zips will now incur a $13.25 fee. UPS originally introduced a fee for this in January 2022.
- Many common surcharges are increasing, with a significant amount increasing by more than 6.9%.
There are also a couple of other changes that are important to be aware of:
- UPS announced that it will be renaming “peak surcharges” to “demand surcharges”. Several years ago FedEx and UPS started implementing these fees to address the increased demand the holiday season brings. Then, the pandemic hit. Both carriers have struggled to meet the surge in demand amid all of the supply chain disruptions and decided to use peak surcharges in response. The decision by UPS to rebrand these surcharges signals that it is viewing them slightly differently. Instead of implementing fees based on seasonal predictability, “demand surcharges” suggests usage anytime there is an uptick in demand. In short, they’re likely here to stay.
- The list of zip codes for zones is changing. Depending on where you’re shipping, you may have to pay based on a longer zone than before. It’s changes like these that make budgeting for your annual cost increase very challenging.
Many shippers will see their costs go up over the announced 6.9% average. With that in mind, let’s look a few factors that could put you at risk for higher-than-average cost increases:
- If you’re shipping larger packages or your packages require special handling. For the past several years, FedEx and UPS have been raising these fees at an alarming rate. Any shipment they can’t run through their normal systems costs them more time and money, and these fees are a way to discourage those types of shipments from entering their networks.
- If you ship a higher percentage of residential shipments. Residential shipments cost the carriers more because they require more stops and are a less efficient use of their driver’s time. Residential fees continue to climb because of this.
- If you ship a lot of low density packages. The pricing structure that FedEx and UPS have put in place punishes lighter shipments that take up a lot of space. The carriers prefer denser packages that take up less space because they’re able to fit more packages on their delivery vehicles.
- If a high percentage of your shipments go to longer zones. It’s always been true that the further your package travels, the more expensive the rate. This year that’s especially true. Longer zones are seeing more increases above the announced average than shorter zones.
- Right-size your packaging. While FedEx and UPS rates are based on weight, that’s not actually the whole story. If your dimensional weight is higher than the actual weight, your package will be rated using the dimensional weight - meaning you’ll be paying more. This makes any excess space within your package extra costly. Focus on packaging that allows space for the items you’re shipping and the necessary cushioning and nothing more.
- Consider opening or using a new distribution center. Shipments with the longest distance to travel cost you the most every year. But in 2023, this will be even more important as the longest zones are seeing the highest increases. Getting closer to your customers could be a great strategy for keeping those costs down.
- Take advantage of discounts available to you. Many trade associations and chambers of commerce will offer FedEx or UPS discounts to their members. Oftentimes the annual cost savings from those discounts more than make up for the cost of joining. PartnerShip works with over 130 groups to provide their members with discounts on FedEx services. Contact our team to find out if you qualify.
Wrapping your head around all of the changes for 2023 FedEx and UPS rates can be challenging. But, using this guide to understand what's behind the announced average and published service guides is a good first step. Use this information to properly budget for the new year and set up any mitigation tactics that work best for your business.
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FedEx and UPS Holiday Shipping Deadlines for 2022
10/21/2022 — Leah Palnik
As you prepare your store for the influx of orders that come with the holiday season, you’re going to want to keep an eye on the shipping deadlines. Both FedEx and UPS have announced the last dates you can ship your orders and make it in time for a Christmas delivery.
It’s important to note these deadlines because demand surges this time of year. The carriers' networks are already strained, and it’s only going to get worse the closer we get to the holidays. To keep your customers happy and set the right expectations, we recommend clearly communicating the shipping cutoff dates and adding in extra days in case of delays.
FedEx has published a complete visual list of the last days to ship. Here are some highlights for domestic shipments:
- December 8 for FedEx Ground Economy
- December 14 for FedEx Ground and FedEx Home Delivery
- December 20 for FedEx Express Saver
- December 21 for FedEx 2Day and 2Day AM
- December 22 for FO, PO, SO, and Extra Hours
- December 23 for FedEx Same Day
UPS has also created a list of the last days to ship for Christmas delivery. Unfortunately, one thing that is missing is a specific cutoff date for Ground shipments. You will need to get a quote on the UPS website instead. For domestic UPS air shipments, the dates are as follows:
- December 20 for UPS 3 Day Select
- December 21 for UPS 2nd Day Air
- December 22 for UPS Next Day Air services
It’s also important to note that service guarantees are currently suspended for both FedEx and UPS ground services. It's also suspended for select air/express services. The main takeaway? You’ll want to encourage your customers to order early and do what you can to add in extra days when setting delivery expectations.
If you're looking for any additional guidance or need a way to lower your small package costs, PartnerShip can help. Contact our team today.
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Ranking the Top 3 Retail Shipping Mistakes
05/05/2022 — Jen Deming
Successful retailers have to be next-level multitaskers. However, with so many operating as small businesses, a large portion are running things without a dedicated shipping department. Doing this may be necessary, but it’s easy to make costly mistakes. By looking at what errors are the most important to be wary of, retailers can better sort out the correct way to manage their small package shipping. Let’s take a look at the top three retail shipping mistakes to avoid, starting with #1.
Mistake 1 - Giving inbound shipment control to your vendors
When you’re receiving inbound shipments, oftentimes the shipping is arranged by vendors. This may seem like the easy way to go, but you could be overpaying on each shipment from every vendor, compounding cost and other challenges that may affect your business. When the vendor arranges your shipping, they choose the carrier and control the cost of transportation, making this a very common retail shipping mistake.
Why choose inbound collect over vendor prepaid?
Choosing inbound collect shipping over vendor prepaid can give you better control over what you’re spending on your shipments and which carrier is used. You can also control which services your business needs, such as specialized equipment or accessorials like liftgates. Additionally, being invoiced directly by the carrier may eliminate any handling or markup fees your vendor could add into the total charges.
PartnerShip can help simplify the process
While managing your inbound orders may seem like a lot of work, partnering with a 3PL can help reduce the amount of effort you have to put in. A quality 3PL like PartnerShip can provide you with competitive pricing and determine if switching from vendor prepaid to inbound collect makes for your business. Inbound experts at PartnerShip can also help create routing instructions and review and enforce vendor compliance.
Mistake 2 - Ignoring DIM weight pricing
Dimensional (DIM) weight pricing is a strategy implemented by carriers to offset the cost, time, and energy spent on moving large or bulky shipments through the small package network. This pricing structure focuses on the amount of space your shipment takes up in relation to its actual weight. Overlooking the impact of DIM weight pricing on your total costs is a crucial retail shipping mistake.
Your DIM weight is determined by the dimensions of your shipment. To cut down on time wasted in your already-packed schedule, we have created a DIM weight calculator. If the figure you calculate is higher than your actual weight, then that is what you will be billed on.
Luckily, there are some strategies that retailers can use to help limit DIM weight charges:
- Right-size your packages by minimizing wasted space inside boxes
Consolidate orders to reduce the total amount of packages being sent
Why retailers need to be mindful of DIM weight
Retailers ship a lot of small packages, whether you’re receiving orders from suppliers or shipping purchases out to customers. In fact, a large component of retail sales are comprised of ecommerce. Due to the sheer volume of packages being shipped, costs can multiply rapidly, especially if your packages are subject to DIM weight pricing. Retailers must be strategic about how orders are packaged.Mistake 3 - Not taking advantage of shipping discountsThe worst shipping mistake that retailers can make is assuming the current rates you’re getting are the best available to you. While large retailers may be able to negotiate substantial discounts directly with FedEx or UPS, it’s more challenging for smaller businesses, especially when many of the discounts are based on volume or may just be promotional.Small businesses can succeedSmaller retail businesses can still obtain discounts through their affiliations. Trade associations, chambers of commerce, or other organizations will oftentimes offer discounts to businesses. By partnering with a variety of service providers, your membership dues can be offset by the benefits and discounts you receive.PartnerShip works with over 130 trade associations and other groups, including several well-known retail organizations, like NSRA and NAMM. By leveraging carrier relationships and industry connections, we help make exclusive FedEx discounts available to retailers, no matter the size of your business or shipping volume.Avoiding mistakes is the first step to successful small package shippingSmall package shipping can be challenging for any team, especially for smaller retail businesses who may not even have a dedicated shipping department. Retailers must keep in mind that they have a few extra important shipping mistakes to avoid that could cause you to pay more for shipping than necessary.No matter the size of your retail business, avoiding these common pitfalls can ensure smooth shipping and lower costs. PartnerShip can help with every one of these challenges, including obtaining competitive pricing. Get in touch with the small package experts at PartnerShip to learn more.
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How to Save on Shipping While Reducing Packaging Waste
04/11/2022 — Jen Deming
We love shopping online. Nothing beats the convenience of delivery, variety of product options, and satisfaction of adding things to a virtual cart and clicking ‘buy now’. Unfortunately, the perks of ecommerce do have a flipside - the environmental impact of shipment packaging waste. Ecommerce shipping actually has about four times as many touch-points as regular retail. This means more packing and unpacking individual orders to customers – leading to even more packaging waste. Savvy e-retailers are minimizing their environmental impact by using eco-friendly shipping tactics and by using less wasteful packaging procedures. Even better, reducing your shipment packaging waste is a sustainable practice that is both eco-friendly and a smart way to lower shipping costs, through these three easy tips.
Tip 1: Reduce the amount of your packaging
If you’re a shrewd retailer, you know that your choice of packaging can protect your product, prevent damage, and enhance the value of your brand through the unboxing experience. But not every product ordered online needs to be shipped within layer upon layer of branded boxes and plastic packaging. Taking a “less is more” approach can help balance both cost and structural integrity, in addition to lowering packaging waste.
When you’re considering what types of shipment packaging to use, retailers have a ton of options. Packaging materials include paper, plastic, or chipboard boxes, foil or poly envelopes, bubble mailers, jute, vinyl, or cotton bags, and many other options. Dunnage, or the internal “protective” material inside the shipment can be Styrofoam, cardboard, kraft paper, soft or rigid plastics, and bubble wrap. Each option has its own cost, key benefit, and impact on the environment. Research what types of shipment packaging make the most sense to adequately protect your product, and then eliminate the use of unnecessary extra materials. Always keep in mind that you can reduce your initial cost and environmental impact by choosing simple, but effective shipment packaging that makes sense for your product and consumer.
Tip 2: Reduce the weight and dimensions of your shipment
It’s clear that wasteful packaging procedures can drive up initial costs, but keep in mind that any unnecessary materials can also affect your shipment rates due to weight and density. Your parcel rate is determined in large part by region, distance traveled, and weight. Heavy shipments put more strain on trucks and utilize more fuel when hauling loads. As a result, carriers will charge you more for added weight.
Another factor that can affect your shipment cost is dimensional weight. DIM weight pricing is used by carriers to offset the cost of moving large and bulky shipments in their network. This pricing strategy focuses not just on the actual weight, but also the amount of space your shipment takes up. Your DIM weight is determined by the dimensions of your shipment. If the calculated DIM weight is higher than the actual weight, your shipment will be rated on that.
Elaborate packaging with multiple components inside runs the risk of wasted interior space, so making sure that you right-size your package is important. Ensure that there is no empty space within your shipping box after the product and protective materials are added in. Reducing wasted space within your shipment can lower your final bill, and greatly reduces packaging waste that can be harmful to the environment.
Tip 3: Encourage your customer to use your packaging for returns
With more people preferring to shop online, the need for convenient returns options increases. Being intentional in how you approach your returns can help lower reverse logistics costs while remaining environmentally conscious.
Every online shopper knows that preparing to ship a return can be a pain. No one loves rummaging through a garage of broken-down boxes hoping to find one adequate for use. It’s not as simple as grabbing an empty box - the package must be structurally sound and free of pre-existing labels to avoid hiccups on the road.
Do your customers (and yourself) a favor, and make this process even easier by utilizing return-ready packaging for your orders, including resealable boxes, envelopes, and mailers. Include pre-printed shipping labels with return addresses and packing slips to help make the process even simpler. By providing return-ready packaging, you’re ensuring that the package is right-sized for pre-paid shipping labels and services. As a retailer, you’re taking steps to avoid possible damages or loss by providing packaging options that securely protect your product while in transit.
In short, by providing return-ready packaging, you’re taking back control of return shipments by managing several variables that may lead to costly surprises and packaging waste.
Reducing packaging waste benefits everyone
Retailers have a unique opportunity to improve the eco-footprint left by their businesses. Environmentally friendly shipping practices can help lower emissions on the road, reduce packaging waste headed for landfills, and lower costs. To further improve your environmental impact, consider working with a sustainably minded shipping provider, like PartnerShip. We elect to work with carriers that prioritize energy efficiency in trucks and facilities, minimize air-pollution, and offer transparency through data about fuel usage and impact. Optimizing your packaging is a smart place to start – learn how with our downloadable, free white paper.
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2021 Year-End Planning for Your FedEx and UPS Shipments
11/15/2021 — Leah Palnik
The end of the year is usually pretty hectic for a lot of businesses, but 2021 is proving to be one for the books. As you navigate the holiday season and prepare for the year ahead, you’ll want to heed our warnings for your FedEx and UPS parcel shipments.
We can’t stress this enough. Delays are becoming more common and will likely get worse the closer we get to Christmas. The FedEx and UPS networks are very strained right now. Fueled by the pandemic and all of its ripple effects, demand for parcel services is at an all-time high. Both FedEx and UPS have suspended service guarantees for their ground services and some of their air/express services, which means you can’t leave things up to chance. Ship early and build in plenty of extra time where you can so you don’t run into major disruptions.
Review holiday shipping deadlines
For retailers, this is especially important. As customers place their orders for holiday gifts, they’ll want to know that they’ll receive them before the big day. FedEx and UPS have released their shipping deadlines, so make sure to review them and plan accordingly. That way you’ll be able to manage expectations appropriately and keep your customers happy.
Prepare for the 2022 rate increases
Don’t sleep on the fact that after you make it through the holiday season, your FedEx and UPS rates will be going up. Both carriers announced that they will be increasing their rates by an average of 5.9%. It’s tempting to take that announced average and budget for your costs to go up by that much, but unfortunately it’s not that simple.
How much your rates will go up in the new year will largely depend on which services you use, your package characteristics, and where you’re shipping to/from. That 5.9% average also doesn’t account for surcharges which can drive up your costs even more. If this all sounds like a major analysis that you don’t have the time to conduct, you’re not alone. That’s why we’ve reviewed the updated rate charts for you. Download our free guide to see a full analysis of what you can expect.
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Decoding the Most Common FedEx and UPS Surcharges
10/11/2021 — Jen Deming
Taking a deep dive into your invoice from FedEx or UPS is a smart move for any shipper. But, once you dig into your statement line by line, chances are you’ll see extra charges that may puzzle you. Those unexpected fees are likely shipping surcharges - costs added to your base price by the carrier.
Though undeniably complicated, it’s important to have a basic understanding of the surcharges your carrier of choice, FedEx or UPS, may apply to your shipment. The more you know about surcharge types and how they impact your bill, the better you can manage your costs. Taking a look at the most common and costly FedEx and UPS surcharges is a great way to become familiar with what you may see on your bill.
When it comes to parcel shipping, oversized shipment charges often lead the way in expensive fees. Ecommerce has led to larger and more irregular-sized shipments in their networks, and both FedEx and UPS implement pricing strategies to offset the extra costs associated with it. Surcharges related to shipment size and specifications are a way to combat packages that could be transported using another service, like LTL freight. These fees are based on both size and weight limits, and vary between carrier.
FedEx and UPS charge different amounts for these fees, though both can be well into the hundreds of dollars. Even more importantly, the definition of what is considered “oversized” can change and the amount charged increases annually at the very least.
FedEx has three separate fees for larger shipments, and each has a different set of criteria.
- Oversized – Applies if your package exceeds 96 inches in length or 130 inches in length and girth combined.
- Unauthorized – Applies if your package exceeds 108 inches in length, 165 inches in length and girth combined, or 105 pounds in weight.
- Additional Handling – Applies if your package exceeds 48 inches in length, 30 inches in width, and 105 inches in length and girth combined; or if your packages weighs more than 50 pounds (domestic) or 70 pounds (international).
UPS also charges fees based on a shipment’s size or whether it has handling requirements.
- Large Package – Applies if your package exceeds 96 inches in length or 130 inches in length and girth combined.
- Additional Handling – Applies if your package exceeds 48 inches in length, 30 inches in width, or 105 inches in length and girth combined; or if your package weighs more than 50 pounds (domestic) or 70 pounds (international).
- Over Maximum Limits – Applies if your package exceeds 150 pounds in weight, 108 inches in length, or 165 inches in length and girth combined.
These are the qualifications that apply as of 2021. Keep in mind it’s always important to stay up to date on changes and amendments throughout the year.
There are certain times when U.S. shipping volume spikes due to an increase in demand. This spike can be caused by seasonal fluctuations, the economy, or any number of other factors. When more shipments are entering the network, it can be a struggle for carriers to meet this demand. Peak surcharges are fees implemented during these times to help offset the extra work it takes to get these packages delivered, and to help weed out the harder to manage, less profitable shippers. Because demand has surged during the pandemic, we’ve seen an unprecedented amount of peak surcharges for both FedEx and UPS, with adjustments being made as needed. As demand stays elevated, they’re likely to continue, which is why it’s important to review what circumstances dictate these charges.
Any shipments that require an extra level of effort (either by package characteristics, frequency, extra services required, etc.) are most likely to incur peak surcharges. The first step in determining whether you’ll be seeing peak surcharges is reviewing a few important factors that put your shipments at risk. Larger packages and those that require additional handling like those we’ve outlined above have been historically affected, and continue to be targeted. In addition to the size of the package, if you’re a large shipper who’s seen an increase in volume, you’ve likely seen a significant spike in your costs due to additional peak surcharges.
Prior to the pandemic, peak surcharges were typically only applied during the holiday season, since that’s when FedEx and UPS saw a consistent increase in package volume. How much the fees cost and what packages they applied to varied by carrier and by year. However there are some trends you can note and typically expect. Just like the peak surcharges that have come along as a result of the pandemic, larger shipments are often targeted with extra fees during the holidays. Residential deliveries are also often hit with peak surcharges since so many people are ordering holiday gifts for loved ones during this time of year, straining the carriers’ networks.
Fuel costs are another common surcharge that will apply to each and every shipping invoice you receive. As commuters, we are well aware that fuel prices are a large component of transportation costs. Whether you’re shipping small package via delivery van, a full trailer, or by plane, you can imagine how much higher those costs can climb. As fuel consumers, we are also aware that the price of fuel does not stay consistent for any set period of time. Something has to be done so that carriers can be sure they aren’t losing money on fuel costs when they fluctuate.
Fuel surcharges are intended to provide an average cost of fuel, so the carrier is protected from loss if fuel prices rise during the term of a contract. Even still, there is no benchmark surcharge amount. The cost can vary by carrier, and as the price of fuel fluctuates, that surcharge will be amended. There are three primary factors that are used to calculate a fuel surcharge: Base Fuel Rate, Base Fuel Mileage, and Source and Interval of the Average Fuel Price. A Base Fuel Rate is the price that determines when a fuel surcharge is to be activated and applied to a bill. Base Fuel Mileage is the miles per gallon that a truck averages on the road. Source and Interval of the Average Fuel Price is a government determined figure and the only component of fuel surcharges that is regulated.
While there isn’t much that you can do to challenge fuel surcharges, it’s important to understand that they exist to protect the carrier from lost profit. Both FedEx and UPS publish up-to-date fuel surcharge information so that you know how this variable affects the cost of your shipment transportation.
Residential delivery charges
Out of all the surcharges that exist, it’s essential for retailers to understand the impact of residential delivery when planning their shipping costs. A “residential delivery” is defined as one that a carrier must make to a home, whether it’s a single-family dwelling, apartment building, condo complex, or a dorm on a college campus. These charges are necessary for carriers so that they can offset the inconvenience of handing off one shipment to a single location - clearly less efficient than delivering to businesses.
Both FedEx and UPS apply residential delivery fees to a variety of scenarios. It’s important to know that businesses operating out of the home will be marked as residential. Additionally, if either the declared delivery location (what’s on the label) or the actual delivery address (in the case of an error) is determined to be residential, the fee will apply. These circumstances are important because while you want to keep costs low, trying to pull one over on the carrier is never a good idea.
Both FedEx and UPS implement fees for a variety of pick-up services. Generally, the fee is calculated depending on the immediacy of the pick-up and the type of location. FedEx breaks down pick-up types into three main categories for its FedEx Express and FedEx Ground services: on-call, return on-call, and regular stop. Each pick-up type has a fee that ranges from no charge to a set cost per package. For regular shippers, there is a maximum weekly fee for cost-savings and convenience.
UPS also offers a variety of pick-up options that are associated with their own charges. Commonly used pick-up options include: UPS On-Call Pickup®, UPS Smart Pickup®, day-specific, and on-route pick-ups. Like with FedEx, as needed services are charged by pick-up or package. Regularly scheduled pick-ups are charged weekly fees that may fluctuate, usually depending on shipment volume.
It’s important to know that pick-up fees are higher for residential locations, metro areas, and inside pick-up services. As in the case of most surcharges, these fees can change, and you should always consult either carrier’s latest service guide for a complete picture of costs. If using pick-up services is cost prohibitive for you, you should consider reviewing drop-off locations as an alternative.
Third-party billing fees
Both FedEx and UPS charge third-party billing fees. These fees are a percentage of the total bill, including base charges and any accessorials needed. As of 2021, UPS and FedEx charge 4.5%. That percentage might sound low, but it can add up fast. If your business is using multiple manufacturers or suppliers to help fulfill your orders, you will be seeing third-party billing fees for each order. It’s also important to note that this fee may cost more in the future, as it has already seen some increases in the past.
FedEx and UPS started instituting a third-party billing largely in response to the increased use of drop shipping by ecommerce retailers. Drop shipping is a process where, rather than keeping inventory on hand, sellers may use a supplier or manufacturer to fulfill and ship orders directly to the customer. As the third-party bill-to, the seller is neither the shipper nor receiver, but is paying the shipping charges.
If you’re often using third-party billing as an option, it may be possible to negotiate rates with your carrier. You may be able to get the fee removed through your agreement, or lower the percentage charged, especially if you’re creating a lot of business for the carrier.
Other notable surcharges
We’ve covered common surcharges that will impact your shipping invoice the most. However, there are several other service fees that you may see.
- Address correction - associated with changes a carrier must make to correct a given address
- Signature services - proof of delivery via signature in order to protect against liability
- Weekend pick-up/delivery – completing shipments outside a carrier’s normal hours of operation
- Delivery area – extra effort it takes to drive out to hard to reach locations, such as rural areas
A general rule of thumb to always remember: if your shipment needs services that require extra effort from the carrier, there is probably an associated charge.
How to prepare for these fees
Most FedEx and UPS surcharges are simply part of the business, and are unavoidable. As a component of your total shipping invoice, you should take the time and effort to understand why they’ve been implemented. Most importantly, a thorough knowledge of the basics can help identify how they will impact your business based on your unique shipping needs. It’s unbelievably important to stay up-to-date on surcharge adjustments and increases by looking at annual service guides periodically. Auditing parcel invoices regularly can help identify which surcharges you’re seeing most frequently.
By understanding how these fees impact your shipping spend, you can create a better plan of action for both your shipping operations and your pricing strategy. Working with a 3PL that is familiar with FedEx and UPS surcharges can help take the stress out of sorting through the data. At PartnerShip, we can help simplify things for your business – from conducting a shipping analysis to publishing resources that offer a Cliff’s Notes version of service guide mayhem.
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How Small Retailers Can Save on Shipping Without Volume Discounts
08/12/2021 — Jen Deming
Small businesses have it tough, and the fact that volume shipping discounts aren’t always an option makes shipping expensive. The good news is that small retailers have options to decrease shipping expenses without having to rely on volume discounts. Check out our helpful video to learn how.
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Your No-Nonsense Guide to Dimensional Weight Pricing
06/28/2021 — Leah Palnik
If you regularly ship with UPS or FedEx, you’ve likely encountered dimensional (DIM) weight pricing whether you realized it or not. Essentially it’s a way for the carriers to charge you more for larger, but lighter, packages. And if you’re not careful, it can drive up your costs significantly.
What is dimensional weight pricing?
Dimensional weight pricing is a way to rate your packages based on density in relation to weight. What that means is that instead of rating your package purely based on its actual weight, it also takes into account how much space your package takes up on the carriers’ delivery vehicles.
How do you calculate dimensional weight pricing?
Luckily for you, we have a DIM weight calculator you can use. But if you’re curious about the formula behind it, it’s fairly simple. Start by calculating the cubic size of your package – multiply length by width by height. Then take that total and divide it by 139, which is the dimensional divisor determined by FedEx and UPS. If the resulting DIM weight is higher than your actual weight, the DIM weight becomes the weight you’ll be rated on – otherwise known as your billable weight.
Let’s look at a couple simple examples. If you have a 12x12x12 box, the dimensional weight will be 12 lbs. So if you’re shipping 15 lbs. of books, your package will be rated based on the actual weight of 15 lbs. But if you’re shipping 5 lbs. of ping pong balls, your package will be rated based on the DIM weight of 12 lbs. since it’s the higher weight.
Why is dimensional weight pricing used?
UPS and FedEx want to discourage shippers from using unnecessarily large packaging, and there is one main reason for this. The larger your package is, the more space it occupies on their planes and trucks. This in turn, leaves less room for other packages. UPS and FedEx make more money and work far more efficiently if they’re able to fill up their delivery vehicles with more packages.
The history of dimensional weight pricing
Once upon a time, not all shipments were subject to DIM weight pricing. The DIM factor that FedEx and UPS use has also changed over time – and not in a way that’s favorable to shippers. While the DIM weight formula and shipment qualifications have remained steady for a few years now, there’s no guarantee that it’ll stay that way. Let this be a lesson on how important it is to stay alert on any announced changes from both carriers.
How do you avoid overpaying due to dimensional weight pricing?
The most important thing you should be doing to avoid DIM weight pricing is right-sizing your packaging. You need to consider both the size of the item you’re shipping and also how fragile it is. Items that are at a greater risk of damage will need more cushioning, which will take up more space. Try to find packaging that allows enough room for the needed cushioning, but no more. The smaller you can make your package, while still keeping your item safe, the better.
There are a few resources available that you can use to find the right packaging for the items you’re shipping. UPS has a Packaging Advisor tool on their website that allows you to select your merchandise category and enter your dimensions to get customized packaging and cushioning guidelines.
FedEx also has a number of packaging guides based on the type of item you’re shipping. But beyond that, FedEx even has a Packaging Lab where you can send your packaging in for durability testing or request a design consultation to improve the efficiency of your packaging. Many of the services are free if you have an account.
Keeping your small package costs low
While ensuring you have efficient packaging to avoid DIM weight pricing is one way to help reduce your shipping costs, another is securing discounts with the carriers. That can be difficult for small and medium sized businesses to negotiate on their own. However, when you work with PartnerShip you can access savings that are typically reserved for high volume shippers. Contact our team to learn more.
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5 Ridiculously Easy Ways to Reduce Your Shipping Costs
12/21/2020 — Jen Deming
In a time where managing business operating expenses is extra important, one of the first places you should look is reducing shipping costs. But analyzing your small package shipping for areas of improvement can be a time-intensive, detail-oriented process. Not everyone has the time to audit invoices and compare rates. For those who want to get the job done quickly and easily, you’re in luck: there are five quick small pack hacks that smart shippers can easily implement to help reduce costs.
- Obtain discounts with carriers
Lots of shippers don’t realize that the pricing structure you are currently using with your carrier may be negotiable, and there are different types of discounts that your account may receive. FedEx and UPS often offer discounts for new accounts when created online, but shippers beware: these discounts are usually temporary, and your pricing may fluctuate based on terms and conditions. You may lose the discounts entirely if you aren’t meeting shipping minimums and your pricing is subject to change at any time.
The more you ship, the better the discounts you’re likely to receive directly from FedEx or UPS. However, even if you have a lower shipping volume, there are still ways for you to obtain discounts. If your business belongs to a trade association or a local chamber, you may have access to discounted rates through your membership. PartnerShip manages over 130 association shipping programs that offer FedEx discounts. If you’re a member of an industry group, look into your member benefits or reach out to our team to find out if you’re eligible.
Take advantage of free packaging
The packaging and supplies you need to properly contain your shipments are important, but can be costly. However that doesn’t mean you should skimp on new materials or reuse old packaging – doing so can compromise the integrity of your shipment and increase the risk of damage. The good news is, some carriers offer free shipping supplies to help ensure your package is secure. Both UPS and FedEx offer free packaging supplies for customers that you can order online and have delivered, free of charge. With free envelopes, packing tubes, boxes, and poly bags, you can be sure your small package shipment will travel safely to its final destination, all while creating some space in your shipping budget.
Make the most of Multiweight and Hundredweight options
From insurance plans to your cable bill, everyone knows you can save money from bundling. That same principal can also apply to your shipping. Both FedEx and UPS offer options for customers who are shipping multiple packages to the same location that can help you save money versus the rates you would pay if they’re considered individual packages. For businesses shipping frequently to the same locations, FedEx multiweight pricing is an efficient and cost-effective service option. UPS has a similar program called UPS Hundredweight.
There is a catch for shippers interested in these options — it isn’t available to just any business. FedEx Multiweight and UPS Hundredweight must be negotiated into your contract, or offered as a part of comprehensive shipping program, like the association programs managed by PartnerShip.
Avoid dimensional weight pricing
To combat the increase in bulky packages entering their systems, FedEx and UPS have implemented dimensional (DIM) weight pricing. With DIM weight pricing, cost is calculated based on package volume, rather than weight. The higher the volume, the more space it takes up in delivery vehicles, which means there is less room for other packages. If a package isn’t particularly heavy but is taking up a lot of space, that’s costly for the carriers.
After calculating your DIM weight, measure the result against your package’s actual weight; the greater of the two will become your billable weight. The best way that you can offset volume-based pricing is to take a hard look at your current packaging procedures. Unused space is a cost-conscious shipper’s worst enemy, so don’t use a package that’s oversized for the product inside and consolidate your orders when possible to ensure you’re not wasting space.
Take control of inbound shipping
Another way to save on small package shipping is by taking control of your inbound shipping procedures. It’s common practice for many businesses to allow their inbound small package orders to be arranged by the vendor. But often times that leads to higher order costs for you. By instructing your vendor to ship through your account, you can reduce your costs through a few simple steps:
- Review your vendor invoices to determine whether you have access to better pricing through your FedEx/UPS account vs. your vendor’s account.
- Create routing instructions that include clear directions on which carrier, account, and service to use for your shipments.
- Ensure vendor compliance by providing your routing instructions to your vendors and regularly reviewing your invoices for accurate pricing.
While taking an in-depth look at how to minimize operating expenses can be time-consuming, these small package hacks give you a few quick ways to ship smarter. For more ways to save, PartnerShip can help.
It’s even more important to cut costs where you can, as FedEx and UPS rates are on the rise. Our free guide will help you easily identify the highest rate increases so you can more easily manage your budget.
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- Obtain discounts with carriers
The Essential Guide to the 2021 FedEx and UPS Rate Increases
12/08/2020 — Leah Palnik
It’s been a wild and unpredictable year, but there’s one thing you can count on as we head into 2021 – the annual FedEx and UPS rate increases. For the fourth year in a row, both carriers announced an average increase of 4.9% for air and ground parcel services. The new rates for UPS will go into effect on December 27, while the new rates for FedEx will go into effect a week later on January 4.
How to budget your parcel costs for 2021
While it may be tempting to budget for a 4.9% increase, you have to dig a little deeper to uncover how much your costs will actually go up in 2021. The actual rate increases vary quite a bit depending on the service you use and your package characteristics.
Both carriers have made the new rates for 2021 available:
You will also need to account for updates to FedEx and UPS surcharges. Common surcharges like Residential Delivery and Address Correction will be more expensive in the new year. But on top of that, FedEx and UPS have both made changes that could cause a package to incur a fee that it wouldn’t have in the past. For example, they both broadened the qualifications for their Additional Handling fee and have updated the list of zip codes for Delivery Area surcharges.
You can view a complete list of the changes that the carriers have each posted:
How to analyze the 2021 FedEx and UPS rate increases
While it’s imperative for you to be aware of the changes coming ahead in the new year, combing through every detail of the new rate charts is challenging and time-consuming. A good place to start is to identify the changes that will have the most significant impact on your budget. First, take a look at your shipments from the last year and identify trends for the services you typically use, your package characteristics, and zip codes. From there you can use the new report from PartnerShip, which highlights the areas with the highest increases and outlines the important changes.
The state of the parcel industry
Aside from the general rate increases, it’s important to understand what’s happening within the parcel industry. Within the past several months, the coronavirus pandemic has brought on a great deal of logistical challenges. Carrier networks have been strained as they struggle to keep up with demand and deal with restrictions. As a result, both FedEx and UPS have instituted peak surcharges.
Most notably, since the beginning of the pandemic FedEx and UPS have been applying peak surcharges to international shipments. Air cargo capacity has been limited which has disrupted the global supply chain and driven costs up.
Additionally, residential deliveries have increased substantially as more people are relying on online shopping. High-volume B2C shippers specifically have been ramping up their business. FedEx and UPS have responded to this increased demand by instituting peak surcharges. Instead of simply applying a surcharge on all residential shipments during the holiday season like they’ve done in the past, UPS and FedEx are applying it to those shippers with a large volume of packages or those who are experiencing a significant increase. That’s good news for many small businesses, but tough on those larger ecommerce retailers.
Even if these peak surcharges don’t apply to your business right now, it doesn’t mean that you’ll forever be immune. There are still a lot of unknowns related to the coronavirus pandemic and how it will continue to impact the supply chain. You will need to stay vigilant and keep up to date on announcements from FedEx and UPS.
What you can do to combat rising shipping costs
With everything the industry is experiencing right now, shippers don’t exactly hold the power. Add the general rate increases on top of that, and you may feel helpless against rising costs. However, there are things you can do to mitigate the damages. Download our guide to the 2021 FedEx and UPS rate increases to help identify the problem areas. Then contact PartnerShip to find out if you qualify for one of our discount shipping programs, and we'll help you ship smarter.
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Carrier Closures for the 2020 Holiday Season
11/19/2020 — Jen Deming
2020 has been a year unlike any other. With the holiday season upon us, managing your shipment timelines is more important than ever. Most carriers have strict cut-off dates to ensure your holiday cheer is delivered on time, and with COVID-19 stretching available carriers extra thin this year, it’s more important than ever to plan accordingly. Whether you’re shipping small packages to customers, or need to order seasonal supplies for your business, we’ve broken down the most important holiday shipping dates that you need to know.
Freight carrier holiday scheduleTruck drivers deserve some time off too, and it’s important for shippers to know which dates carriers are closed for business so you can plan your loads. Here are the 2020 holiday season closure dates for some common freight carriers:
- UPS Freight will be closed November 26-27, December 24-25, and January 1. There will be modified service hours on New Year’s Eve, December 31.
- YRC Freight will be closed November 26-27, December 23-25, and January 1-2.
- XPO Logistics will be closed November 26-27, December 24-25, and January 1.
- Old Dominion will be closed November 26, December 24-25, and January 1. There will be limited service hours on November 27 and December 31.
- New Penn will be closed November 26-27, December 23-25, December 31, and January 1.
- Pitt Ohio will be closed November 26-27, December 24-25, and January 1.
- Reddaway will be closed November 26-27, December 24-25, and January 1. There will be limited service hours on December 23 and December 31.
- Dayton Freight will be closed November 26-27, December 24-25, and January 1.
- R&L Carriers will be closed November 26-27, December 24-25, and January 1.
- Estes will be closed November 26-27, December 24-25, and January 1.
- Central Transport will be closed November 26 and December 25. There will be limited service hours on November 27 and December 24.
- Roadrunner will be closed November 26-27, December 24-25, and January 1.
- FedEx Freight will be closed November 26-28, December 24-25, and January 1.
- Holland will be closed November 26-27, December 24-25, and January 1. There will be limited service November 27, December 23, and December 31.
- AAA Cooper will be closed November 26-27, December 24-25, and January 1.
- ArcBest will be closed November 26-27, December 24-25, and January 1.
Small package carrier closures and deadline dates
With a holiday season projected to be bigger than any other, it’s super important to review holiday carrier schedules and deadlines. For your shipments moving with FedEx, make sure to reference the FedEx holiday schedule so you can plan ahead. If you're using UPS to ship during the season, remember to check the UPS year-end holiday schedule beforehand.
If the unprecedented volume of holiday shipments has you saying "no, no, no" instead of "ho, ho, ho," the experts at PartnerShip can help. Please keep in mind that our office will be closed on November 26-27, December 25, and January 1. Happy Holidays from PartnerShip, and hang in there - we're welcoming 2021 with open arms!
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5 Crucial Holiday Shipping Strategies for Ecommerce Sellers
10/09/2020 — Leah Palnik
As a consumer, it might feel like it’s too soon to start thinking about the holidays, but retailers know that waiting is not an option. If you’re an ecommerce seller, you’ve probably already been stocking up your inventory and preparing for the increase in traffic to your site. As you’re getting ready for this busy time of year, keep these crucial holiday shipping strategies in mind.
- Reduce your parcel rates
Shipping orders to your customers can get expensive, fast. While some of the big players in ecommerce can negotiate discounted rates directly with FedEx and UPS, that doesn’t mean that the smaller sellers have to suffer. If you belong to a trade association or a chamber of commerce, check out their member benefits. Many groups offer parcel discounts with UPS or FedEx that are included as part of your membership.
- Consider on-demand warehousing options
If you don’t need year-round warehouse space, but your orders ramp up significantly during the holiday season, consider using on-demand warehousing. This can help alleviate the pressure on your existing operations, in a time when it’s crucial that everything runs smoothly. A key part of this strategy is also the added ability to reach your customers sooner. It’s no secret that meeting customer expectations for deliveries is essential to your business, and with the right warehousing partner, you’ll be able to reduce transit times and gain access to cost-effective expedited services.
- Clearly communicate shipping deadlines
There are some of us who are guilty of waiting until the last minute to do their holiday shopping. When’s the last day to order for Christmas? Do you offer expedited options or any special seasonal guarantees that could give you a leg up over the competition? Managing customer expectations for holiday shipping will increase your customer satisfaction. Clearly communicate this information on your website, during the purchasing process, and in emails to your subscribers.
- Consider special promotions
Now is the time to pull out all the stops to maximize your sales. People are looking to buy, and it’s your job to incentivize them to spend their hard earned dollars on your site. According to a report by the National Retail Federation, 50% of shoppers cited a limited-time sale or promotion as the reason they were swayed to purchase an item they were on the fence about.
Even more notable, 64% of shoppers said that free shipping has influenced them to make a purchase. Offering free shipping has become the new normal in the world of ecommerce. If you’re worried about the costs of “free shipping” there are several different strategies you could try. For example, try setting the free shipping threshold above your average order amount to increase the amount people spend when making a purchase on your site. When executed properly, consumers will be more likely to add items to their cart to meet the minimum and it becomes a win-win.
- Set up a streamlined returns process
With increased holiday sales comes the inevitable – returns. According to a Narvar Consumer Report, 74% of customers said return shipping fees will prevent them from making a purchase. On the flip side, 72% said that a “no questions asked” return policy would make them more likely to buy from a retailer. The influence of the return policy on the purchase decision is undeniable. Make your return policy as customer friendly as possible and communicate it clearly at the beginning of the shopping experience. Also, take proactive steps like providing return labels in the original order and offering in-store returns so it is less of a headache for you and your customers.
Striking a balance between appealing customer promotions and the right holiday shipping strategies can help make your season bright. If you need to reduce your parcel costs or could use some help with storage and fulfillment, PartnerShip has you covered. Our shipping and warehousing services set ecommerce sellers up for success. Contact us today to learn how you can ship smarter.
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- Reduce your parcel rates
How to Package Parcel Shipments Cost Effectively
06/30/2020 — Leah Palnik
When evaluating ways to lower your shipping costs, you don't want to overlook the impact that packaging has on your bottom line. In fact, there are a few high cost culprits that may surprise you. Learn how to package your parcel shipments more cost effectively with these 4 simple tips.
Looking for an intro into the fundamentals of proper packaging? We have the ultimate guide.
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A Practical Guide to Parcel Shipping Rates
04/23/2020 — Leah Palnik
The ever-rising cost of parcel shipping is a hot topic. FedEx and UPS raise their rates regularly and find clever, new ways to recoup costs. The changes aren’t always clear and can catch shippers by surprise. However, if you have a solid understanding of what determines small package rates and what to look out for, you’ll be in a good position to manage your costs.
How parcel shipping rates are determined
- Weight. No surprise here, but how much your shipment weighs plays a large part in how much it will cost to ship. If you take a look at the service guides for UPS and FedEx, you’ll notice that the heavier the package, the higher the rate.
- Dimensions. You can’t look at just the weight alone. In fact, your package dimensions could cause your shipment to be rated at a higher weight, thanks to what is known as dimensional (DIM) weight pricing. Carriers use this to ensure you’re paying for the space that your shipment takes up in their delivery vehicles. Larger packages take up more room, leaving less space for other deliveries. To avoid this increase in your parcel shipping costs, it’s imperative that you’re efficient with your packaging.
- Service. If you need your shipment to get to its destination sooner rather than later, you’re going to pay for it. Air services that offer delivery overnight or next day will cost you the most. In comparison, if you can plan for some extra time, using a ground service will save you.
- Distance. Your origin and destination ZIP codes play a big part in determining your rate. The farther your shipment needs to travel, the more you’ll pay. This is based on groups of ZIP codes that parcel carriers refer to as zones.
- Fuel. This is a tricky one to put your finger on because both UPS and FedEx will make adjustments on a weekly basis based on information published by the U.S. Energy Information Administration (EIA). The surcharge is a percentage and applies to the base rate, as well as a number of accessorial charges.
- Surcharges. Based on your shipment’s characteristics, you can be hit with additional fees known as accessorials or surcharges. These fees are assessed for things like residential deliveries, additional handling, and oversized dimensions. The best thing you can do is educate yourself on the common fees so you can budget for the unavoidable ones or make some changes to avoid the ones you can.
- Discounts. Not every account is created equal. You may be able to secure discounts directly with your carrier if you have significant volume. For everyone else, you can get discounts by working with a third-party like PartnerShip.
The history of FedEx and UPS rate changes
At the end of every year, FedEx and UPS both announce a general rate increase (GRI). In recent history, it has been an average increase of 4.9%. However, that is only an average – meaning that some rates will actually increase by more or less based on service and package characteristics. Throughout the year, keep track of the type of parcel shipments you process – the services you’re using, the weight and dimensions, and zip codes. That way you’ll be able to focus on determining the rate increases that will affect you the most when the time comes. This information can be overwhelming to go through, so get help where you can. PartnerShip publishes a guide to the rate increases every year that can be a great resource for when you’re planning your budget.
Changes to parcel shipping costs to look out for
It’s hard to predict exactly what changes FedEx and UPS will make to their rates, but it’s important to note that they don’t leave them untouched outside of the GRI. In fact, over the past few years they have been making more changes throughout the year. These changes tend to affect surcharges rather than the base rates. Not only how much they’ll cost you, but also how they’re defined. For instance, FedEx and UPS recently lowered the weight threshold for the Additional Handling fee. That means that more packages will get dinged with that surcharge. Obviously this isn’t a rate increase, but it’s a way that your costs could increase.
FedEx and UPS also make changes based on long-term industry trends, seasonal demand, or unforeseen changes in the market. When their networks are strained the most, FedEx and UPS are bound to react. For example, during past peak holiday seasons when online orders are known to be at an all-time high, UPS instituted a surcharge for residential shipments. And most recently, during the COVID-19 pandemic, FedEx and UPS instituted a temporary surcharge on international shipments due to air cargo capacity being limited.
The bottom line on parcel shipping
Understanding all of the factors that make up your parcel rates is the first step to uncovering opportunities to cut your costs. Along with having that solid foundation of knowledge, keep a good record of your parcel shipments and their details so you can accurately forecast your needs and make adjustments. Lastly, stay on top of the latest updates from FedEx and UPS by reviewing their published changes and signing up for service alerts.
You don’t have to navigate these changes alone. PartnerShip provides resources to help you make sense of parcel shipping rates and can help you cut your costs. Contact us to get started.
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2020 FedEx and UPS Rates Explained
12/10/2019 — Leah Palnik
If you’re planning to budget for your costs to go up 4.9% in the next year, you better think twice. The announced average doesn’t paint a complete picture. The rates for some packages will be increasing less than 4.9%, but that means that the cost to ship other packages is increasing far more. What you’re shipping, where you’re shipping it to, and what service you’re using will ultimately determine how much you should budget for your shipping costs in the new year.Here are the released rates for 2020:
FedEx and UPS surcharges
The rates, however, are only one part of the equation. You also have to take into account the additional fees that UPS and FedEx tack on. It’s more important than ever to be mindful of what could qualify your packages for these surcharges. Not only do the costs increase year over year, but the carriers also make adjustments to how the charges are defined – making it more likely that your packages will be hit with them.
A prime example of this is the change both FedEx and UPS made to their Additional Handling fee for 2020. They’ve lowered the weight threshold to 50 pounds from 70 pounds, which means your costs could go up significantly if you ship packages within that window.Here are all of the announced surcharge changes:
Online shopping has had a profound effect on the parcel industry and the way that FedEx and UPS operate. The carriers are moving more residential deliveries and an increased amount of larger packages, as consumers have become accustomed to being able to order almost anything online and receiving it in 2 days or less.
The changes FedEx and UPS have instituted in recent years and are making in 2020 are a direct response to these industry trends. In the past several years, they’ve broadened the use of dimensional weight pricing, added new peak surcharges, and drastically increased the surcharges for larger packages.
Understanding the 2020 rate increases
We know how daunting it is to analyze the 2020 FedEx and UPS rates, so we’ve done the hard work for you. In our free white paper, we break down the new rate charts and simplify some of the complicated changes. It’s the best way to find out what will cost you the most in the year ahead. Looking for ways to offset the rate increases? We can also help with that. Contact us to find out if you qualify for one of our discount shipping programs.
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Parcel vs Freight: What Works Best for You?
10/22/2019 — Jen Deming
The differences between parcel shipping and less-than-truckload (LTL) freight shipping can be difficult to identify, at least on the surface. If you're not using either service regularly, it can be challenging to know which shipping option you really need. But, there are some definite factors that make a difference to a shipper's experience, like transit times, pricing structure, and security risk. Knowing more about the key differences of parcel vs freight shipping can help determine which makes the most sense for your shipment.
Risk and security
Packaging and handling practices can vary between parcel vs freight shipping, affecting your freight's risk of damage. Typically, parcel shipments are smaller, individually boxed shipments that move separately within the carrier system. Most are under 70 lbs., but they are accepted up to 150 lbs. Freight loads are larger and most often consist of multiple boxes or items collected onto a pallet, or within strapped-together crates, and ship together as a group. Both types of shipments have packaging requirements that include protective material inside the container to help prevent damage. Because freight shipments often use shrink wrap or other binding material to keep boxes together, loss is minimized.
Because of their smaller size, parcel shipments can be easily handled and are generally auto-sorted through the carrier conveyor system. They are then taken to a regional location and transferred through multiple stops and service terminals until final delivery. Because of all the handling, combined with the smaller size of loose parcels, there is an increased risk for lost or misrouted boxes. Freight shipping also includes loading and transfer at multiple stops, but it's less frequent than parcel services. Fewer stops means less loading, but because the pallets may need to be moved with a forklift, there is a risk of damage associated with handling that shippers must keep in mind.
Driver service level
A key point to keep in mind when considering parcel vs freight shipping is the truck driver's level of involvement when it comes to handling the shipment. Parcel shipments moved by common carriers such as FedEx or UPS are loaded, unloaded, and delivered by hand. A shipper is responsible for proper packaging and labeling, and a receiver must check the shipment carton count and for damages. But generally, a driver will take care of handling, including front door pick-up or inside delivery.
Freight shipping is an entirely different story. The driver only moves your freight from pick-up to destination; it is up to the shipper and consignee to have a team ready for the loading and unloading of the freight. This means the driver will not assist. Driver assistance can be requested, but because it is considered a special service, expect to pay extra. Additionally, accessorials such as inside delivery or limited access locations may incur other fees on top of regular shipping charges.
Pricing and cost efficiency
One of the most significant differences in parcel vs freight shipping relates to how pricing is calculated. Freight pricing is determined by several variables, including distance traveled, fuel cost, weight, additional services, and the classification of the shipment. Lane pricing is set by carriers and certain routes across the country can be more competitively priced than others depending on the volume of industry or location type. For example, shipping off-mainland or to a densely congested city's downtown area can be pricey. Depending on your product type, or the density of your shipment, the freight class can either increase or decrease. Lastly, carriers tend to have different levels of liability coverage, depending on freight class, in the event of damage claims on a shipment. Freight class is an extremely important factor for freight shippers as it pertains to cost.
Parcel pricing can also be complicated. The shape, weight, and size of a package all affect the cost, in addition to the type of service requested. Shorter, expedited transit times cost more than standard ground shipping options. Additionally, dimensional (DIM) weight pricing has become popular with common carriers. Dimensional weight bases price on the package volume in relation to its actual weight. The practice was implemented in an effort to minimize awkwardly-sized shipments that waste space in a carrier's truck. It's important to properly calculate your dimensional weight so that you can accurately predict the cost of your shipment.
Knowing the differences of parcel vs freight shipping can help you make the right choice in service and save you in shipping costs. If you're shipping larger, heavier items, or can combine multiple shipments into a single load, using an LTL freight service is right for you. If you're shipping smaller, single boxes and want faster door to door service, parcel shipping is the better option.
Understanding how pricing is calculated for both, and what you can expect your shipment to encounter during transit, will help you ship smarter. If you're still unsure which would make the most sense for your business, call 800-599-2902 or contact us today.
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UPS and FedEx Peak Surcharges Announced for 2019
09/24/2019 — PartnerShip
UPS and FedEx have both announced that they will not apply peak season surcharges on residential deliveries this holiday shipping season. However, both companies will continue peak surcharges on large shipments and those requiring additional handling during the holidays.
During the 2018 holiday season, UPS applied a per package residential peak delivery surcharge of $0.28 for ground and $0.99 for air shipments. This year, the company is leveraging its expanded air and ground capacity, and automated sorting hubs and processing facilities, to pass cost savings on to customers in the form of no residential delivery peak surcharge. More than 75% of UPS's small package volume will pass through these automated facilities in peak 2019.
“We delivered a record-setting 2018 peak season in terms of both on-time delivery performance and operations execution,” said David Abney, UPS Chairman and CEO. “We will build on the lessons learned last year and leverage our new efficient air and ground capacity to make the 2019 peak season another success for customers, investors and other stakeholders.”
This is the third holiday season FedEx has not added additional peak surcharges on residential deliveries. With UPS and FedEx both not applying a residential delivery surcharge this year, it is great news for e-commerce retailers and online shoppers. Online sales are expected to grow 14% to 18% this holiday season, and in the past, these residential delivery surcharges were passed along to shoppers in the form of higher shipping costs.
It’s important to remember that both UPS and FedEx are implementing peak surcharges this holiday season on larger packages and those that require additional handling.
UPS peak surcharges will apply to larger packages from October 1 through January 4:
- $31.45 per package for shipments that qualify as large (a 20% increase from 2018)
- $250.00 per package for shipments that qualify as over maximum limits (a 51.5% increase)
- $3.60 per package for shipments that require additional handling (a 14% increase)
- $37.60 per package for shipments that qualify as oversize (a 36.7% increase from 2018)
- $435.00 per package for shipments that qualify as unauthorized (a 190% increase)
- $4.10 per package for shipments that requires additional handling (a 13.8% increase)
The growth of e-commerce and online shopping for large and awkwardly shaped products such as mattresses and furniture has necessitated these surcharges because heavy and bulky packages can’t move through the automated systems in which UPS and FedEx have heavily invested. Through these surcharges, shippers are paying the price for the loss of efficiency these packages represent.
If you’re a retailer, you should pay close attention to this year’s UPS and FedEx peak season surcharges so you can make any needed changes now to help ensure you remain profitable during the busy holiday shipping (and shopping) season. A good first step would be to look at the large packages you ship and determine which will be impacted by the peak surcharges.
The UPS and FedEx additional handling peak surcharge will be triggered by packages that:
- Weigh more than 70 pounds
- Measure more than 48 inches along its longest side and more than 30 inches along its second-longest side
- Are not enclosed in traditional corrugated cardboard packaging
UPS Over Maximum Limit and FedEx Unauthorized Package surcharges will be triggered by any package that exceeds 150 lbs., 165 inches in length and girth combined, or longer than 108 inches.
Surcharges for these packages are already high; additional UPS and FedEx peak surcharges represent an added dent to your bottom line. When deciding how to ship your small package shipments, or if you should use LTL to ship your oversized or heavy packages, you need an expert on your side. PartnerShip manages shipping programs for over 140 associations, providing exclusive discounts on small package shipments to their members. To find out if you qualify or to learn how you can ship smarter, contact us today.
FedEx and UPS rates will be going up after the holiday season! Make sure you know what to expect so you can mitigate the impact to your bottom line. Our free white paper breaks down where you'll find the highest increases and explains some of the complicated changes you need to be aware of.
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Your Guide to the 2019 FedEx and UPS Rate Increases
12/17/2018 — Leah Palnik
FedEx and UPS rates will be going up in 2019, and it’s more important than ever that shippers know how to mitigate the impact to their business. In November, FedEx announced that its small package rates will increase an average of 4.9% as of January 7, 2019. In December, only a few weeks before the change is set to take place on the 26th, UPS announced the same average increase.
If you’re thinking that means you can budget your costs to go up by 4.9%, you are sorely mistaken. There is a lot to unpack with these rate increases. For starters, some services are increasing at a higher rate than others – meaning that depending on the services you commonly use, your costs could go up significantly more than the announced average.
Other factors determine how much more you will pay for your FedEx and UPS shipments in 2019. You will need to look at the new rates based on your package characteristics, as well as how far your shipments are being sent. Here are the released rates for 2019:
FedEx and UPS surcharges
The announced average increase only covers the base rates. You’ll also need to consider what fees and surcharges apply to your shipments. Many of these surcharges are increasing quite a bit. Here are the announced changes:
One surcharge to take note of is the Third-Party Billing fee. A couple years ago, UPS introduced this in response to the growing popularity of drop shipping. Right now if you use third-party billing, you will incur a charge of 2.5% of total cost. Beginning December 26, UPS will be increasing that charge to 4.5%. FedEx is leaving its Third-Party Billing charge unchanged at 2.5% for 2019. This is just one example of why it’s important to evaluate the changes that come out each year from UPS and FedEx. One small difference can have a huge impact on your costs.
The most costly surcharges continue to be those that apply to shipments that qualify as “Unauthorized” or “Over Maximum Limits.” If you send a package with UPS that weighs more than 150 lbs., exceeds 108 inches in length, or exceeds a total of 165 inches in length and girth combined, you’ll be looking at a $850 charge on top of your base rate. That same package will incur a $675 charge if you ship it with FedEx. Either way, you’ll be paying a huge premium to ship larger, bulkier packages.
Peak season strategies
It’s also important to note that ahead of the 2019 general rate increase (GRI), FedEx and UPS both announced peak season surcharges. For those larger packages, the carriers applied additional surcharges during the busiest time of year. A huge difference between the two, however, was an additional charge on residential shipments. UPS applied a $0.28 peak surcharge on residential ground shipments, while FedEx decided that for the second year in a row, it wouldn’t follow suit. If you’re a retailer that delivers a large amount of customer orders over the holidays, that charge can add up fast.
Trends in the small package industry
If you zoom out on all of these changes from FedEx and UPS, there are a few insights to glean.
- FedEx and UPS tend to institute similar pricing strategies. The carriers have a habit of matching each other when announcing average increases, and when one introduces a new charge or a different way to account for something, the other tends to do the same down the road. That doesn’t mean that it doesn’t matter which carrier you use. Instead, it’s important to stay on top of the changes and evaluate your options on a regular basis so you’re always using the service that works best for your budget.
- Many of the changes over the years have been put in place as a result of the ecommerce boom. With more shipments coming from online orders, comes more trends that strain the carriers’ networks. For example, ecommerce has led to more residential deliveries and more deliveries of oversized packages. That’s why you’ll see the carriers making changes that help them to recoup some of the costs associated with these trends.
- Both carriers have been making changes throughout the year, instead of just during the GRI. For example, FedEx and UPS both increased their Additional Handling surcharges ahead of the new year – in September and July respectively. When UPS first introduced peak surcharges for residential ground shipments, that was also done outside of the annual announcement. This just highlights how important it is for shippers to stay aware throughout the year.
We know you don’t want to comb through every tedious page of the 2019 FedEx and UPS service guides and compare them to your current rates. That’s why we did the leg work for you. In our free white paper, we break down where you’ll find the highest increases and explain some of the complicated changes you need to be aware of. If you’re looking for ways to offset the rate increases, we can also help with that. If you’re a member of one of the many associations we work with, you can get access to exclusive discounts. Contact us and we’ll find a way to help you save.
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FedEx and UPS Peak Season Surcharges: The Important Differences
08/09/2018 — Leah Palnik
FedEx recently announced that for the second year in a row, it won’t be applying a peak season surcharge on residential shipments. This is good news for retailers who expect a significant amount of e-commerce orders over the 2018 holiday season.
UPS, however, will be instituting a surcharge on residential ground shipments from November 18 through December 1 and then again from December 16 through December 22. UPS will be charging $0.28 per package for most residential shipments using ground services. For UPS air services the fees are as high as $0.99 per package.
UPS delivered around 700 million packages during the 2017 holiday season – a huge jump compared to the rest of the year. Ordering online has become so commonplace and easy for shoppers, and the carriers are feeling the effects. The increase in volume over the holidays drove UPS to introduce this new peak surcharge for the first time last year.
Typically UPS and FedEx have comparable rates and surcharges and will mimic each other’s changes, so this is a notable distinction between the two small package giants.
FedEx is sending a clear message to shippers. “FedEx delivers possibilities every day for millions of small- and medium-sized businesses,” said Raj Subramaniam, executive vice president and chief marketing and communications officer at FedEx Corp. “We are demonstrating our support for these loyal customers during this critical timeframe by not adding additional residential peak surcharges, except for situations where the shipments are oversized, unauthorized or necessitate additional handling.”
It’s important to note that both carriers are implementing charges on larger packages. With the rise of e-commerce, people are ordering items online that they would’ve exclusively purchased in-store in the past – including televisions and appliances. FedEx and UPS have made several adjustments to account for these trends, including a pushback on larger packages. Heavy and bulky packages don’t move through their automated systems and require more attention. FedEx and UPS are putting a price tag on that loss in efficiency and shippers need to stay aware.
FedEx will apply peak surcharges for larger packages from November 19 through December 24:
- $3.20 per package for shipments that necessitate additional handling
- $27.50 per package for shipments that qualify as oversize
- $150.00 per package for shipments that qualify as unauthorized
UPS will apply peak surcharges for larger packages from November 18 through December 22:
- $3.15 per package for shipments that necessitate additional handling
- $26.20 per package for shipments that qualify as large
- $165.00 per package for shipments that qualify as over maximum limits
If you’re not careful, the surcharges can add up fast. These peak surcharges are in addition to the already existing surcharges that apply to larger packages, and any others that may apply including delivery area and residential surcharges.
Retailers should take note of these peak season changes to ensure a profitable 2018 holiday season. If you see a significant amount of online orders over the holidays and ship with UPS, you’ll be paying an extra $0.28 per package, which will eat into your bottom line.
To prepare, take a look at what you shipped last year around the holidays and determine a forecast for this season. From there you’ll be able to see how much more you can expect to spend during the designated peak season. You may find that switching from UPS to FedEx for the busiest time of the year will provide you with a decent cost savings. Depending on the billable weight of your shipment and the destination, the base rate could be lower with FedEx – compounding the savings during peak season. It’s worth evaluating the options, when the holiday season can make or break your year.
There are many factors to consider when deciding how to ship your small package shipments. You need an expert on your side. ParterShip manages shipping programs for over 140 associations, providing exclusive discounts on small package shipments to their members. To find out if you qualify or to learn how you can ship smarter, contact us today.
FedEx and UPS rates will be going up after the holiday season! Make sure you know what to expect so you can mitigate the impact to your bottom line. Our free white paper breaks down where you'll find the highest increases and explain some of the complicated changes you need to be aware of.
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Your Guide to Proper Packaging
05/30/2018 — Leah PalnikProper packaging is a critical step in the shipping process. Just one mistake can expose your shipment to costly and time-consuming damages. Not only do you need to use quality materials, but you also need to package your products in a way that will increase strength and durability. Packaging is not a one-size-fits-all game, but it does start with some basic best practices.
Small Package Shipments
When picking a box for your products, you want one that is in good condition (no holes, rips, or dents) and is sized just right. There should be just enough space for the needed cushioning and no more. If you use a box that is excessively large you run the risk of being charged according to your dimensional (DIM) weight, which can get quite pricey.
How you cushion your contents will depend on the product you’re shipping. In general, you can protect the contents of your package with bubble wrap, foam cushioning, paper pad, or packing peanuts. This will help to prevent damages caused by movement and vibration that occur during transit.
Then it’s time to seal and label your package. Use packing tape rather than duct tape or masking tape, and seal your box using the H taping method. Remove any old labels from the box and place your label on the largest surface. Labeling is an important step for proper packaging, because it helps get your shipment to the right place without any unnecessary delays.
When deciding how to package your freight, consider the size and weight of your shipment and how it will be handled. What kind of protection will it need? Will it be on a dedicated truck or will it be moved on multiple vehicles?
Palletizing your freight will give it a solid base and will make movement on and off the truck easy and safe, making it a good choice for many different types of loads. Wooden pallets are the most common, and are typically recommended by carriers like FedEx and UPS Freight. However, you may consider metal, plastic, or corrugated pallets depending on what you’re shipping.
For the cartons on your pallets, make sure the contents inside are packaged properly with the needed impact protection and each carton is labeled with the shipper and consignee information. While stacking, you need to consider how it will affect the strength of your shipment. Start by placing heavier cartons on the bottom with lighter boxes at the top, and distribute the weight evenly. Use an aligned, column pattern while stacking and make sure there is no overhang.
Once your pallet is stacked, you’ll want to secure it with stretch-wrap and banding. The stretch-wrap should go around the cartons several times and be twisted every other rotation for increased durability. For banding, use sturdy steel, rayon, polypropylene, nylon, or polyester straps.
You may also want to consider crating if you’re shipping fragile freight. First, select a crate that is constructed from quality lumber. Most carriers will recommend plywood rather than oriented strand board (OSB), medium-density fiberboard (MDF), or particleboard. You also want to make sure your crate is sized appropriately, with excess space kept to a minimum.
Proper Packaging Is Key
Avoiding damaged freight and a claims nightmare starts with proper packaging. Along the way, you’ll also save yourself from costly DIM weight charges and increase the durability of your shipments. The time you spend up front to make sure you have proper packaging will be well worth it. Get in-depth instructions by downloading our free white paper – The Ultimate Guide to Packaging Your Shipments!
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The 2018 FedEx and UPS Rate Increases: A Closer Look
11/20/2017 — Leah Palnik
With the New Year approaching, it’s time to look at the UPS and FedEx rate increases for 2018 and how they will affect your costs. In September, FedEx announced an average increase of 4.9% on Express and Ground services. UPS joined the party in October, announcing that they will also be increasing their rates by an average of 4.9%. The new 2018 UPS rates will take effect on December 24, 2017, while FedEx will be instating them a week later on January 1, 2018.
The averages might be the same, but the rates vary. With higher increases for some services and lower increases for others, you can’t budget based on your costs increasing 4.9%. It’s important to look at what services you use, your package characteristics, and the locations you’re shipping to, and then evaluate the new rate charts to find your biggest cost offenders from the 2018 FedEx and UPS rate increases.
On top of the FedEx and UPS rate increases for 2018, there are additional updates that are likely to affect your shipping costs. First, UPS is lowering its dimensional (DIM) weight divisor from 166 to 139 for domestic packages less than or equal to one cubic foot (1,728 inches) in size. With this change, UPS and FedEx are back in line with each other on how they calculate dimensional weight. Both carriers will now use 139 for all domestic and international packages.
It’s been a wild ride the past few years with multiple changes to which packages DIM weight pricing applies to and how it’s calculated, so this is a welcome stabilization. However, a lower divisor means a higher chance that your package will get billed at your DIM weight, rather than your actual weight. If you ship packages one cubic foot or under with UPS, it’s important to take note and make changes to eliminate any unused space in your packaging or consolidate orders when possible.
Surcharges are also increasing, with some at alarming rates. Most notably, in 2018 FedEx and UPS are coming after larger, oversized packages. Not only are they increasing at a higher rate than most surcharges, they are by far the most costly. For example, the FedEx Unauthorized Packages fee is increasing from $115 to $300 and the UPS Over Maximum Limits charge is increasing from $150 to $500. The shipping trends that have resulted from the rise of e-commerce has taken its toll on the carriers and they’re having to move more and more oversized packages that can’t go through their automated systems. Time is money, so they’re tacking on hefty fees to make up for it.
Ahead of the new FedEx and UPS rate increases for 2018, new holiday peak season charges will also apply. UPS is adding peak surcharges on domestic residential packages during the busiest shipping days of the year – from November 19 to December 2 and from December 17 to December 23. These fees will add up quick when you have an increased amount of orders over the holidays.
In a notable departure from UPS, FedEx decided not to add a peak season surcharge this season. Instead they opted to increase surcharges for packages that are big or bulky enough to require special handling. UPS is also increasing the cost of larger packages by adding additional peak season surcharges on top of the already existing surcharges. The 2018 UPS rate announcement included increases for these surcharges for the next holiday season, so you can expect this trend to continue.
The 2018 FedEx and UPS rate increases are proof that the carriers are getting smarter, hitting shippers where it hurts most. Luckily, you don’t have to navigate the changes alone. The shipping experts at PartnerShip have evaluated the new rate charts and we have completed a detailed analysis, so it’s easier for you to assess the impact on your shipping costs. Download our free white paper today!
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FedEx Announces General Rate Increases for 2018
10/05/2017 — Leah Palnik
You may have heard that FedEx announced its General Rate Increases (GRI) for 2018. In the past few years, UPS has been the first of the two major small package carriers to make an announcement for the coming year, but this time FedEx is taking the lead.
Here are the announced average increases that will take effect January 1, 2018:
- 4.9% for FedEx Express domestic and international services
- 3.5% for FedEx One Rate
- 4.9% for FedEx Ground and FedEx Home Delivery
- 4.9% for FedEx Freight
As it’s important to remember every year, these averages don’t paint a complete picture. The zones you typically ship to and the services you typically use could dramatically affect the actual increase you’ll see on your invoices. Some are much higher than the average, while others are much lower or remain the same. UPS is likely to make its announcement for 2018 rates soon and if history is any indication, the averages will be similar to its competitor.
FedEx and UPS traditionally have similar average rate increases, but in the last few years their base rates have diverged a bit. Ground base rates used to be nearly identical, but in 2017 the two carriers took different increases in different zones, making it harder to compare apples-to-apples. On top of that, they also implemented slightly different approaches to dimensional (DIM) weight pricing, by using different DIM factors. As a result, looking at what would be most cost effective for you and how your rates will change has become more complicated.
Another trend that we’ve seen from UPS and FedEx is the announcements of additional changes throughout the year, separate from the GRIs. The announced averages have gone down in recent years, but these mid-year adjustments can sometimes have a larger impact.
One example of this is the new peak season surcharges that UPS is implementing for the holidays this year. UPS recently announced that it will apply a 27-cent charge on all ground residential packages during its busiest weeks in November and December. FedEx is taking a notably different approach and forgoing any additional holiday residential surcharges except for packages that are big or bulky enough to require special handling.
Both UPS and FedEx attribute charges like this to the rise of e-commerce, which has brought a sharp increase in residential shipments, particularly oversized items like furniture and exercise equipment. These kind of parcel shipments put a strain on their networks and their sorting machinery, and they've been finding ways to make up for these costs.
FedEx is also making a couple of additional moves to address the changing nature of parcel shipments in 2018. It will now apply a surcharge for shipments with third-party billing – mimicking a move that UPS made at the beginning of 2016. FedEx will also begin applying a DIM factor of 139 to all SmartPost parcels, effective January 22. UPS already applies DIM weight pricing to SurePost packages, but uses a higher DIM factor for packages 1,728 cubic inches and under.
Every year, when the new rates for UPS and FedEx are out, PartnerShip does a complete analysis so you can determine what effect it will have on your business. Subscribe to the PartnerShip Connection blog to be alerted when it’s out so you can start planning for the new year and learn how to mitigate the rising costs of small package shipping.
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UPS Adds Residential Holiday Shipping Surcharges; FedEx Will Not Follow
08/30/2017 — PartnerShip
The holidays are approaching and that means an increase in small package shipping. If you use UPS for residential Ground shipping, you’ll also see new holiday residential shipping surcharges from the Atlanta-based company.
UPS announced that it will add a 27-cent charge on all Ground residential packages sent between November 19 and December 2. This includes two of the busiest online shopping days of the year, Black Friday, which is November 24 and Cyber Monday, which is November 27.
The charge hibernates for two weeks, then returns December 17 through December 23, during which time all Ground residential deliveries will see the additional 27-cent charge, plus an additional 81-cent charge for next-day air shipments or an additional 97 cents for two-day or three-day delivery.
According to financial news outlet Bloomberg, the surcharges will increase the cost of UPS residential deliveries by roughly 3 percent.
The stated reason for the company’s surcharge increases is that online shopping and e-commerce has grown significantly over the last twenty years and UPS sees a huge influx of packages during the holiday shopping season that puts stress on its systems, processes and machinery. On an average day, UPS processes around 19 million packages but during the holiday season, that number swells to 30 million packages.
In order to meet demand, UPS says it has to add planes, trucks, and thousands of employees; and the surcharges are necessary to offset the additional cost of the holiday package surge.
“UPS’s peak season pricing positions the company to be appropriately compensated for the high value we provide at a time when the company must double daily delivery volume for six to seven consecutive weeks to meet customer demands,” according to Glenn Zaccara, a spokesperson for UPS.
UPS is also adding a Large Package surcharge of $24 and a Over Maximum Limit surcharge of $249. Both of these UPS surcharges are effective November 19 through December 23, 2017.
In a notable departure from UPS, FedEx will not apply residential surcharges this holiday season, except for packages that are big or bulky enough to require special handling.
Between November 20 and December 24, 2017, FedEx Express and FedEx Ground in the U.S. and Canada will increase the additional handling surcharge by $3 per package and $25 per package for oversize packages. The largest surcharge of $415 per package is only applied to packages that exceed the FedEx maximum size limit and cannot move through its sorting equipment.
With the additional handling surcharge for oversized packages, both UPS and FedEx are trying to discourage large and heavy, odd-sized shipments, because they cannot pass through its automated systems and require additional handling. In fact, the volume of oversized packages handled by FedEx Ground has increased 240 percent during the past ten years and is now 10 percent of the ground operation’s volume. This is “largely driven by expansion of e-commerce into sports equipment, furniture, mattresses and other things that weren’t largely available on e-commerce 10 years ago,” according to Patrick Fitzgerald, senior vice president of marketing at FedEx.
It's important to evaluate how you these changes might affect your shipping costs. Through a PartnerShip-managed shipping program, you can receive significant discounts on select FedEx services - resulting in savings that can help to offset cost increases like these. If you're not sure if you qualify for one of our small package shipping programs, contact us and we'll find the solution that's right for you.
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A Closer Look at DIM Weight Pricing
11/29/2016 — Leah Palnik
Dimensional (DIM) weight can be a tricky subject to master. All of the changes that small package carriers UPS and FedEx have made in recent years don’t help. In 2017, FedEx is lowering the DIM factor for domestic packages to 139 from 166. UPS is making the same change for domestic packages less than or equal to 1,728 cubic inches. So how will this change affect you?
First, it’s important to understand what dimensional weight is and how it’s calculated. Dimensional weight pricing is a common industry practice that sets the transportation price based on package volume, in relation to its actual weight. Carriers use dimensional weight in order to account for the space packages take up on their trucks and planes. This allows for a more precise way to charge for their services.
The basic formula for calculating DIM weight is (length x width x height)/DIM factor. For most small packages, the DIM factor will now be 139. The one exception is UPS domestic packages 1,728 cubic inches and under. UPS originally didn’t announce any changes to its DIM weight pricing for 2017, but it followed suit after FedEx announced it would be using 139 as the DIM factor for both domestic and international packages. Let that serve as a reminder to stay informed, as UPS and FedEx are continually making updates to their rates, surcharges, and DIM weight rules.
Once you calculate your DIM weight, compare it to your actual weight. The greater of the two will become the billable rate. When deciding if you need to make any adjustments to how you ship your packages in the upcoming year, start by doing an analysis of your common shipments. Look at those package measurements, calculate the cubic inches (length x width x height), and find the DIM weight to determine your billable weight. For an easy way to determine your billable weight, click here to use our DIM weight calculator.
UPS and FedEx base rates differ quite a bit more in 2017 than they have in the past. Because of this, you’ll want to make sure you’re not just using DIM weight pricing to determine which carrier to use. Download our free white paper, Understanding the 2017 Small Package Rate Increases, for a detailed analysis on the new rates.
Since density is the name of the game, make sure you review your shipment packaging to reduce the size of your package if you can. Don’t use oversized boxes that contain unused space and, where possible, consolidate orders. By being more efficient with your packaging, you’ll ensure you’re not paying to ship empty space.
One of the best ways to offset the rate increases and DIM weight pricing changes is to ensure you’re maximizing any discounts available to you. PartnerShip offers association members discounts on select FedEx services. If you're not sure if you qualify for one of our small package shipping programs contact us and we'll find the solution that's right for you.
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Understanding the UPS and FedEx Rate Increases
11/11/2016 — Leah Palnik
Every year small package carriers FedEx and UPS evaluate their shipping rates and make adjustments that can have a substantial effect on you and your business. The UPS rate increases take effect on December 26, 2016, while the new FedEx rates take effect on January 2, 2017. As always, how much more expensive your particular small package shipments will be in the new year depends on many factors, including shipment volumes, sizes, weights, and modes.
Here are some quick facts:
- FedEx Express and International rates are increasing an average of 3.9%
- UPS Air and International rates are increasing an average of 4.9%
- FedEx Ground and Home Delivery® rates are increasing an average of 4.9%
- UPS Ground rates are increasing an average of 4.9%
- The dimensional divisor for FedEx domestic packages is changing from 166 to 139
- UPDATE: the dimensional divisor for UPS domestic packages greater than 1,728 cubic inches is changing from 166 to 139
- FedEx SmartPost®, FedEx One Rate®, and UPS SurePost® rates will be changing
The important takeaway when thinking about your shipping expenses in 2017 is that the announced average increases paint an inaccurate picture of the true impact these new rates could have on your business. The shipping experts at PartnerShip® have dug into the details and analyzed the new rate tables to assess the true impact to shippers and help you make sense of these changes. Learn more about how the 2017 rate increases will affect your shipping costs by downloading our free white paper!
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Get winning! Enter the FedEx Advantage® $25,000 Get Ready Sweepstakes
10/13/2016 — Leah Palnik