Carriers UPS and FedEx Corp. have announced average shipping rate increases of 4.9% for 2008. DHL says it will announce its 2008 rates next week.
The new rate plans follow similar increases announced this time last year, as the carriers have made annual increases a routine occurrence. “Although annual rate hikes seem to shock many merchants at this time every year, these hikes have occurred on an annual basis for decades,” says Dana Madlem, business development manager at Rush Order Inc., a Gilroy, CA-based provider and fulfillment, warehousing and customer relationship services.
The 4.9% rate increases-which result in an average shipping cost increase of less than 50 cents on the typical under-$10 fee for ground-shipping a small package-have the biggest impact on merchants emphasizing the sale of low-margin products, Madlem adds. “Carrier rate hikes are partially responsible for a noticeable trend in the retail industry,” he says. “In recent years, merchants with lower price points have felt the brunt of the pain as periodic rate hikes accumulate.”
The carriers note, however, that the increases are necessary to maintain existing levels of service. "These rate adjustments will allow FedEx to continue making the necessary investments in our business," says Michael Glenn, FedEx executive vice president, market development and corporate communications.
The new UPS rate structure will take effect Dec. 31, 2007, when rates will increase by a net average of 4.9% for UPS Ground, Ground Hundredweight and all air express and U.S.-origin international shipments, UPS says. The carrier’s increase for air express and international shipments is based on a 6.9% increase in the base rate, minus a 2% reduction in the current fuel surcharge, it says. UPS will make its 2008 Rate and Service Guide available for download from UPS.com beginning Dec. 31.
The new FedEx rates will take effect on Jan. 7, 2008, when the average FedEx shipping rate for FedExpress air shipments will increase by a net average of 4.9%. The increase is comprised of a standard 6.9% increase in standard list rates, minus a 2% drop in the fuel surcharge.
FedEx says it will announce later this month increased shipping rates and service surcharges for FedEx Ground shipments. Further information is available at Fedex.com/us/rates2008.
FedEx will also increase rates beginning Jan. 7 for shipments inbound to the U.S. from certain foreign locations. It has yet to specify those rate increases, but says that starting next year its customers importing goods to the U.S. will pay U.S. dollar rates. “This provides a consolidated set of U.S. import rates to U.S. customers allowing them to avoid uncertainties caused by currency fluctuations,” FedEx says.