Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
As shipping rates rise on average 4.9%, many e-retailers face steeper hike.
As they do every year, United Parcel Service Inc. and FedEx Corp. are increasing their shipping rates, this year by an average of 4.9%. But for many retailers, the overall hike will be much larger, a shipping expert says.
At FedEx, the average 4.9% rate hike will take effect Jan. 7 and cover shipments of parcels weighing up to 150 pounds through FedEx Ground and FedEx Home Delivery. At UPS, the average 4.9% rate hike went into effect Dec. 31 for UPS Ground Services, and parcels up to 150 pounds. Each of those rate hikes include a one percentage point discount related to a reduction in a fuel surcharge.
But the 4.9% average is based on all sizes and weights of packages, and because most online retailers ship packages of 30 pounds or less, their average rate increase will run higher than 4.9%, says Ken Wood, president of shipping advisory firm LJM Consulting. "Overall, most e-commerce retailers will have a rate increase of about 7% or 8%," he says.
For shipments forwarded by UPS and FedEx to the U.S. Postal Service for local residential deliveries under the USPS's Parcel Select program, the USPS is increasing shipping rates by about 9%, effective Jan. 27, the USPS says.
In addition, UPS and FedEx are increasing for 2013 surcharges and accessorial fees, such as surcharges for delivering to residential addresses and fees for handling packages with incorrect address labels. According to Wood, UPS and FedEx will impose a surcharge of $2.80 for delivering to a residential address, up about 10% from $2.55 in 2012.