Why Are Shipping Costs So High 2023
Written by han park
Many customers wonder why shipping costs have become so expensive recently. The main reason for this increase is the world’s issue, COVID-19. The pandemic has disrupted global supply chains since 2020. The recent rise in shipping rates directly reflects this. Since the pandemic, more consumers than ever have turned to e-commerce to purchase products. All supply chain disruptions and demand spikes have caused inflation. Added to that is the fuel surcharge that was applied after the war in Ukraine skyrocketed global energy prices. As a result, regular rates have increased for all carriers FedEx, UPS, USPS.
FedEx and UPS announced the highest annual general rate increase of 6.9% in the history of both companies. Growth as the would have a much more significant impact on most businesses. E-commerce businesses that compete on lower margins or differentiate themselves with free shipping are also likely to be impacted. Some companies that handle products that weigh more than 50 pounds or that are in packages that are longer than 48 inches on the most extended side pay even more because of additional shipping and handling charges. Like last year, companies in industries such as auto parts, furniture, home goods, and sporting goods that ship large or heavy loads will be particularly hard hit by the new rules and fees in 2023.
Average Increase chart in 2023
UPS | Increase Rate | FEDEX | Increase Rate | USPS | Increase Rate |
UPS Average Rate | 6.90% | FEDEX Average Rate | 6.70% | USPS Average Rate | 5.50% |
UPS Ground | 6.36% | FedEx Ground | 7.91% | Retail Ground | 6.45% |
UPS 3 Day Select | 9.95% | FedEx Home Delivery | 7.91% | Parcel Select | 5.10% |
UPS 2nd Day Air | 7.67% | FedEx Express Saver | 7.46% | Priority Mail | 5.50% |
UPS Next Day Air Saver | 7.10% | FedEx 2 Day | 7.47% | Priority Mail Express | 6.60% |
UPS Next Day Air | 7.16% | FedEx 2 Day® AM Package | 7.87% | First-Class Package Service | 7.80% |
UPS Next Day Air Early | 6.46% | FedEx Priority Overnight | 8.49% | Domestic Extra Services | 6.50% |
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| Priority Mail International | 6% |
Click full list of 2023 UPS Rates | Click full list of 2023 FEDEX Rates | Click full list of 2023 USPS Rates | |||
There are several ways to reduce the impact of these rate increases. Size the packaging appropriately. Delivery companies are priced by weight, but that’s not all. Suppose the dimensional weight is greater than the actual weight. In that case, the package will be evaluated using the dimensional weight, which will cost you more. Any excess space within the box becomes an additional cost. In addition, consider using a 3pl warehouse. 3PL warehouses receive significant discounts due to high volumes of shipments through numerous FedEx, UPS, USPS. The annual cost savings from these discounts could lessen the hit this year. PNPLINE works with over 100 groups to offer members discounts on FedEx, UPS and USP services. Contact our team for future business operations.
Reference
FedEx. (2023). FedEx rate changes. https://www.fedex.com/en-us/shipping/rate-changes.html.
UPS. (2023). UPS Shipping Costs and Rates. https://www.ups.com/us/en/support/shipping-support/shipping-costs-rates.page
USPS. (2023). 2023 Postage Price Changes. https://faq.usps.com/s/article/2023-Postage-Price-Changes#:~:text=Overall%2C%20Priority%20Mail%20service%20prices,are%20scheduled%20to%20take%20effect.
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