Are You Ready for Carrier General Rate Increases?Posted on December 03, 2019
As shippers worry about getting packages to customers this holiday season, they have to keep an eye on the calendar for another annual tradition: carrier general rate increases (GRI).
Every aspect of a business carries a cost, but as more customers expect free or low-cost shipping at lightning fast speeds, the added costs brought about by these GRIs can certainly cut into profits.
And free shipping is a deciding factor for many online shoppers.
According to a global study by leading SaaS shopping platform provider BigCommerce, half of the respondents said they would not even shop with a retailer unless free shipping is available, while 24 percent of respondents said they would only pay for shipping if there were no other option.
Furthermore, online shoppers are more than ready to click to the next e-tailer in the Google search results if shipping options don’t meet their expectatiions. Eighty percent of the BigCommerce study respondents reported that they had abandoned a shopping cart rather than use an unsatisfactory option and 84 percent of global respondents said they completed an online purchase from a retailer specifically because of a free shipping offer.
However, outbound shipments aren’t the only things that retailers need to worry about post-holiday (or throughout the year, really) when it comes to carriers boosting their shipping rates.
Free and easy returns are increasingly important factors in the buying process. In fact, the largest eCommerce marketplace now allows for returns to be dropped off at UPS stores unboxed and unlabeled, greatly simplifying the returns process for online shoppers.
The recently released Pitney Bowes Online Shopping Study shows that 70 percent of those surveyed said they “hate” paying for return shipping even more than missing the deadline for the return and getting stuck with an unwanted item (61 percent).
An easy returns process is not only important for e-tailers trying to engrain brand loyalty early in younger shoppers, but also for Gen Z (28 percent) and Millennials (30 percent), according to The Retail Economics report, The Digital Tipping Point, commissioned by law firm Womble Bond Dickinson, which surveyed 2,000 UK adults.
With that in mind, here are the General Rate Increases that eCommerce merchants will have to contend with in the coming year:
- DHL Express announced a 5.9 percent GRI on shipments moving to and from the U.S., effective Jan. 1, 2020.
- FedEx: Effective Jan. 6, 2020, FedEx Express, (domestic, U.S. export and U.S. import), FedEx Ground and FedEx Home Delivery shipping rates will increase by an average of 4.9 percent, while FedEx Freight will increase rates by an average of 5.9 percent.
- UPS: Effective Dec. 29, 2019, UPS ground, air, and international rates will increase by an average of 4.9 percent.
- USPS: Priority Mail Express will increase 3.5 percent, and Priority Mail will increase 4.1 percent, on average.
Along with the carrier GRIs for 2020, some carriers are increasing their special service fees. FedEx and UPS plan to add an “additional handling surcharge” on air and ground deliveries of parcels weighing 50 to 70 pounds. Currently, shipments up to 70 pounds are exempt from any special service fees.
While many retailers and eCommerce players are focused on optimizing sales, shipping costs can cut into profits if automated transportation management processes are not in place. The need to utilize an omnichannel, multi-carrier approach to shipping is vital to the bottom line, and having a complete enterprise shipping solution such as Transtream can help manage costs, saving time and money.