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Higher Annual Carrier Rate Increases Tighten the Squeeze on Parcel Shipping

Supply Chain Dive recently published an article examining the effects of higher-than-normal annual rate increases from major parcel carriers. Among the key points:

  • The published 5.9% general rate increases common to the major carriers could be closer to 9% when accounting for adjustments to common surcharges (fuel, oversized packages, etc.)
  • Surcharges could account for up to 40% of transportation costs compared to 10%-15% in recent years
  • Carriers are prioritizing more profitable deliveries from small and medium-sized businesses by leveraging the capacity crunch
  • Ground parcel rates are expected to be more than 25% higher in Q1 2022 than Q1 2018

The best way to combat these alarming trends is to employ a multi-carrier shipping strategy and leverage parcel shipping software to manage carrier capacity. Moving to a multi-carrier shipping strategy enables shippers to rate shop and select the best carrier and service for each parcel based on point of origin, point of destination, delivery timeframe, cost, capacity availability, and shipper-established business rules. Choosing the best rate and service for each parcel can help shippers offset these common surcharges as well as limit the impact of rate increases on the bottom line.

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From Supply Chain Dive:

“Additionally, FedEx and UPS aren’t the only game in town, and more shippers are diversifying their mix of carriers to include regional players.

‘Regionals are finally getting their due because of what’s happened in the marketplace, with UPS and FedEx having peak restrictions, because of the massive amounts of volume that have come through, especially on e-commerce,’ said Melissa Priest, founder and CEO of Alexandretta Transportation Consulting. ‘Shippers haven’t had much choice but to really examine and make use of the regionals when they can.’”

Contact us today to learn how advanced multi-carrier parcel shipping technology can help you save on shipping costs with multi-carrier shipping strategies and carrier capacity management.