UPS and FedEx Increase Rates 6.9%


Logistics innovations

A 6.9% increase is a big jump by any measure. Although in context of today’s inflation rate, it might appear as a bargain. 

Every business owner understands that convenience goes a long way regarding consumer satisfaction. As a result, retailers strive to be fast, affordable, and the preferred option for their customers. The race to become the most convenient retailer leads to positive business competition and improved services.

However, one central area where most small to mid-sized retailers need help to balance profitability and customer convenience is product delivery. While some merchants have delivery services in-house, most depend on courier service providers to perform their deliveries. Unfortunately, relying on courier services sometimes leads to inconveniences for both the seller and their customers.

Increased Shipping Costs Over Time

Many retailers operate with a level of uncertainty because of the ever-increasing cost of shipping. It’s no secret that courier service providers take every opportunity to hike the price of their services. Unfortunately, the increased costs fall on the shoulders of retailers. As a result, the retailers either increase their products’ prices or reduce their profit margins. Such a situation brings unfair competition in the market because small retailers lack the financial might to offset their overhead costs.

Early this year, FedEx hiked its shipping charges by 6.9%, the most significant hike it had done in a decade. Not to be left out, UPS followed suit and increased their rates in kind (as often is the case). Like FedEx and UPS, DHL Express plans to increase its shipping tariffs to the US by 7.9% in 2023. Lastly, Canada Post raised its shipping fees by 1.4% for international packages and 4% for domestic and commercial parcels.

Couriers have consistently increased their prices in the past. However, the recent price hikes are more significant than those prior. Moreover, the cost rises with little regard for retailers who depend on these services. Retailers also have to deal with the expense of returned goods, which experts estimate to be between 17% and 30% of the prime cost.

If there were a viable solution to the situation, it would reduce the operating expenses for courier providers, leading them to lower shipping charges for retailers. But, unfortunately, retailers are left holding the bag, searching for alternatives (more on this in a bit).

Courier Mistakes Inconvenience eCommerce Customers

Most online retailers depend on third-party couriers to deliver goods to customers. However, couriers can (and do) make mistakes that affect the hard-earned relationship between retailers and their customers. For instance, the courier may delay delivery, inconvenience the client, impose surcharges not readily disclosed, or lose shipments altogether.

Such situations undermine the seller’s relationship with customers, especially when the late deliveries break the retailer’s promise to deliver a product by a specific time or date. For example, if a courier service delays the delivery of a product, yet the retailer promises 24-hour delivery, it’s likely to lose a valuable customer.

Another courier misstep that can strain the retailer-customer relationship is mishandling products and misplacing packages. Customers expect goods to reach them in perfect condition. The retailers also have a similar expectation when they hand the goods to the courier. Unfortunately, some delivery companies mishandle packages or leave them on the front porch in poor weather or when nobody is home, leading to loss, breakage, or deformation. Damaged or lost goods disappoint buyers and make retailers look bad.

Retailers can suffer irreparable damage to their reputations because of couriers’ mistakes. So what’s the best solution to this widespread problem?

Smart Lockers for the Win

Smart lockers are devices that automate the drop-off, storage, and retrieval of packages. They are safe, secure, and incredibly convenient when placed in suitable locations. But North America needs to catch up to the party regarding smart lockers.

Other countries, like Poland, with over 16,000 strategically placed smart lockers, are reaping the benefits these intelligent devices provide. Courier-agnostic, smart lockers placed in strategic locations, often within just a couple kilometers of each resident, offer myriad of benefits to retailers and consumers.

  • Safe – Shipments are safely stored out of the elements.
  • Secure – Worrying about porch pirates becomes a thing of the past.
  • Efficient – Package deposits can be made during off-peak driving hours.
  • Convenient – Accessible 24/7, customers can pick up shipments on their own time.
  • Cost effective – Deliveries and poduct returns can save retailers (and customers) up to 45%.
  • Good for the environment – Fewer stops for couriers means less vehicle emissions.

Unlike Poland, which had the financial backing of its national government, a North American smart locker network requires private investment. Couriers, however, need more financial incentives to pursue smart lockers. So what’s the next best option?

Photo of a courier walking with a packageSmart lockers are perfect for residential and office lobbies.

Small, niche-based smart locker solutions for couriers and logistics companies, like those currently being built by Parcel Port Solutions, are establishing the first cornerstones of a larger, interconnected network. As the independent solutions grow, they will become nodes in a broader network accessible by retailers, couriers, and consumers.

The result is a logistics solution that is a win-win-win for all parties – including the environment, which is a win for everyone!