by Michelle Mondonedo
At the end of every year – like clockwork – major logistics couriers announce rate increases in response to shipping supply and demand, market forces, and rising costs.With eCommerce consistently growing year over year, general rate increase announcements from couriers are now as certain as death and taxes.
In this post, we’ll share the new changes for USPS, FedEx, and UPS that eCommerce sellers should be aware of in 2019.
2019 USPS Postage Rate Increases
Priority Mail saw rates increasing between 3-10%, with smaller packages being affected the most.
Priority Mail is the USPS’ core solution for shipping packages domestically, so this change will affect everyone. From January 27, 2019, the rate for a 1 lb Priority Mail package went from $6.70 to $7.35, while the Priority Mail Small Flat Rate box went from $7.20 to $7.90 – a 9.7% increase for both services.
The Medium Flat Rate Box and Large Flat Rate Box will see a 5.1% and 5.5% increase, respectively.
The dimensional weight (DIM weight) divisor will change from 194 to 166.
Changing the divisor to a smaller number means a higher weight per cubic foot will be applied - effectively increasing costs if your shipment is under the dimensional weight. Reducing your package size and making sure you have efficient packaging can prevent overpaying on shipping.
DIM weight will also be applied to all zones for Priority Mail parcels over 1 cubic foot.
Previously, DIM weight was only applied to parcels being shipped to Zones 5-9. This, combined with the reduction of the DIM weight divisor means that small businesses will have to factor in both weight and distance when estimating their shipping costs.
Do note that while the rate increases go into effect in January, the DIM weight divisor change and DIM zone changes won’t go into effect until June 23, 2019.
First Class Mail will now be priced according to zones.
First Class Mail is the solution for packages weighing under 15.99 oz. Previously, rates were dependent on the weight of the item. Now, distance will factor into the rate, meaning it will now cost more to ship these packages over longer distances.
Priority Mail International saw average rate increases between 3-5%.
USPS’ core solution for shipping packages internationally were not immune to rate increases. However, USPS doesn’t apply additional charges such as fuel and residential delivery like express couriers do, still making it an economical choice for those shipping overseas.
2019 FedEx Rate Increases
FedEx Express and FedEx Ground rates increased an average of 4.9%.
This increase is in response to the growth of eCommerce sales and the need to meet ever increasing consumer demands. These rate increases went into effect for US customers on January 7, 2019.
Working with a shipping reseller like Easyship can help you access already discounted rates without having to meet volume requirements, allowing your business to offer competitive rates for express shipping options.
Certain shipping surcharges and fees have also increased, possibly affecting the total shipping rate.
Examples of affected surcharges include:
Delivery Area Surcharge - U.S. Express Package Services, FedEx Ground (Residential): increasing from $4 to $4.20, a 5% increase.
Residential Delivery Charge - U.S. Express Package Services, U.S. Ground Services, International Ground Service: increasing from $4.15 to $4.40 per package, a 6% increase.
Address correction: increasing from $15 to $16 per correction, a 6.6% increase.
Reduce cart abandonment by being upfront about your shipping costs with customers. Having consistent messaging throughout your website about additional costs (on your home page, FAQ, and product pages) will prepare customers for what they should expect at checkout.
Additionally, ensure you are collecting accurate customer details by having an address verification at checkout. This will reduce the amount of address corrections, and subsequently, failed deliveries.
Visit FedEx.com for the complete list of changes.
2019 UPS Rate Increases
Similar to FedEx, the rates for UPS® Ground, UPS Air and International services will increase an average net 4.9%.
According to UPS, these rate increases are meant to support “ongoing expansion and capability enhancements” and became effective on December 26, 2018.
To decide whether UPS is the best solution for your business, you can easily compare rates with other couriers using our Get A Quote feature.
The Domestic Air Fuel Surcharge will increase by 0.25% for all thresholds.
Per UPS, these surcharges will continue to be based on the national Average U.S. Gulf Coast Jet Fuel Price and adjusted weekly.
Fuel surcharges are unavoidable when using an express courier. Read our blog post on other hidden fees you may not be aware of when shipping.
The rates for certain value-added services and other charges will increase.
Examples of affected surcharges include:
The additional handling fee for packages over 70 lbs in actual weight will increase $4.
The Hazardous Materials (dangerous goods) charge for domestic UPS® Ground Services will increase $2.00.
The Residential Surcharge for domestic UPS® Ground Service, UPS® Standard to/from Canada and UPS® Standard to/from Mexico shipments will increase $0.35.
Visit ups.com for the complete list of changes.
Preparing your business for shipping GRI’s
Work with multiple couriers.
By using a mix of postal, regional, and express couriers, you have a better chance of getting the best rates for every major destination. An additional benefit is the opportunity to provide more delivery choices to your customers. Easily compare rates between multiple couriers by using our Get A Quote feature.
Re-think your free shipping policy.
With economical couriers like USPS raising rates to maintain revenues, some small businesses may find it harder to completely cover the costs of free shipping. Consider restricting free shipping to local destinations or refrain offering it year-round.
Work with a reseller for additional discounted rates.
If you’re worried that your current shipping volume won’t qualify your business for additional discounts with major couriers, consider working with a company like Easyship. One account will give you access to over 250+ shipping solutions that are discounted up to 70% off retail prices.
By using a shipping software like Easyship, you can also keep track of your shipping costs all in one place, allowing you to easily analyze your spending and help navigate future GRI’s.
With the volume of eCommerce packages increasing each year, couriers have no choice but to implement general rate increases to be able to process these additional volumes while continuing to uphold demanding customer standards.
As these increases are announced at the end of every year and usually implemented at the beginning of the next year, small businesses should take this opportunity to examine their shipping costs and make adjustments to ensure their shipping strategy is optimized.