2020 FedEx and UPS Price Changes: What You Need to Know

In 2020, FedEx and UPS have announced a series of price changes that will impact shippers worldwide. The changes will come into effect on various dates, and retailers must be prepared to adjust their shipping strategies accordingly. In this article, we will explore everything you need to know about the upcoming rate changes, strategies for mitigating the effects of price increases, and tips for reducing your shipping expenses.

Sneak Peek: What to Expect from Upcoming Price Changes

The upcoming FedEx and UPS rate changes will affect different services differently. Some of the most significant changes include:

• Rates that are higher for ground, freight, and parcel express shipping services
• Increased peak residential surcharges and additional handling surcharges
• New surcharges for larger, heavier packages
• Changes to fuel surcharge rates and other fees

A Breakdown of the New Rates

Let’s look at some specific changes you might need to know:

• FedEx Express, FedEx Ground, and FedEx Home Delivery will all have a 4.9 percent average rate increase in 2020. Also, starting on January 6, 2020, FedEx will also instate a residential surcharge for all FedEx Ground shipments.
• UPS also will increase its rates. Beginning Dec. 29, the carrier’s rates will go up an average of 4.9%.
• Some surcharges are specific to each carrier. And some of these surcharges are increasing by as much as 66 percent for both carriers.
• Both major carriers are also looking to target heavier and larger packages to increase revenue.

How Will These Changes Affect Small Businesses?

Small businesses that rely on shipping services to deliver their products to customers will be hit hard by these rate changes. The increased costs will eat into their profit margins, making it harder for them to compete with larger companies that can absorb the higher costs.

However, there are some steps small businesses can take to mitigate the impact of these changes. For example, they can negotiate better rates with their carriers, switch to a different carrier that offers more competitive rates, or explore alternative shipping options like regional carriers or the United States Postal Service.

Navigating the Impact of Shipping Rate Changes on Retailers

For retailers, higher shipping rates represent a significant cost that can eat into margins. Businesses that rely on frequent, high-volume shipping need to analyze their shipping strategies to ensure they aren’t negatively impacted financially by these rate increases. The following strategies can help mitigate the effects of shipping rate changes:

Strategies for Mitigating the Effects of Price Increases

• Re-evaluate your shipping needs regularly: Understanding your shipping needs and monitoring the costs associated with individual carriers can help you choose the best options available. When shipping small packages across shorter distances, using the USPS may prove to be the better deal.
• Negotiate lower rates with your carrier: Reach out to your FedEx and UPS account managers to discuss ways you can save on shipping costs. The key is to determine what you want to accomplish before beginning these conversations.
• Explore different shipping options: Research alternative shipping providers such as DHL or regional carriers to gauge if there are better rates available.

How to Communicate Shipping Cost Changes to Customers

When shipping costs are increased due to a rate change, you must notify your customers. Keep communications brief, informative, and professional. The following tips will help you communicate shipping cost changes to your customers:

• Mention the update in your email marketing blast: Let your customers know the rates have changed if they use either carrier.
• Offer guidance on how to read the updated delivery prices: By giving some examples of what a common package weight would cost before and after the rate increase, you can educate your customers.
• Note how the increase differs by service level: Rates vary by shipping speed and package level, so make sure you’re being specific.

It’s important to note that shipping rate changes can also have an impact on customer behavior. Higher shipping costs may lead to customers abandoning their carts or seeking out alternative retailers with lower shipping rates. To combat this, retailers can consider offering free shipping promotions or setting minimum order thresholds to qualify for free shipping. Additionally, providing transparent and accurate shipping cost estimates during the checkout process can help manage customer expectations and reduce cart abandonment rates.

Cutting Costs: Tips for Reducing Shipping Expenditure

Whether or not shipping rate increases are an issue for your business, reducing shipping expenses is always a good idea. You can cut your shipping costs by:

Negotiating with Carriers for Better Rates

Many retailers have been successful in negotiating better shipping rates with carriers by demonstrating their loyalty and value to the carrier. In particular, offering higher volume shipping proves you are a good partner to the carrier.

Streamlining Shipping Processes to Save Time and Money

Create a shipping strategy that focuses on eliminating processing and handling costs as well as ensuring that each package is sent with the most efficient carrier.

Using Shipping Software to Compare Rates

Consider using shipping software to compare rates from different carriers. This can help you find the most cost-effective option for each shipment, and can also save time by automating the shipping process.

Offering Free Shipping with Minimum Purchase

Consider offering free shipping to customers who make a minimum purchase. This can encourage customers to buy more, and can also help you save on shipping costs by consolidating multiple items into one shipment.

In Conclusion: What You Need to Know About Upcoming Shipping Rate Changes

As shippers prepare for the new year, they need to prepare for rate increases that may impact their bottom line. Businesses and carriers will need to be adaptable and flexible enough to navigate these changes. Use these tips to start strategizing your shipping plans ahead of time to be ready and minimize the cost impact of the 2020 FedEx and UPS rate changes.

It’s important to note that these rate changes are not unique to FedEx and UPS. Other carriers, such as USPS and DHL, may also implement rate increases in the coming year. It’s crucial for businesses to stay informed and keep an eye on all carrier rate changes to ensure they are making the most cost-effective shipping decisions. Additionally, exploring alternative shipping options, such as regional carriers or consolidators, may also help mitigate the impact of these rate changes on your business.

LateShipment.com: Your Partner in Shipping Optimization

In addition to the tips provided, consider utilizing a third-party optimization platform such as LateShipment.com. LateShipment.com is an innovative platform designed to save time, hassle, and money on shipping. Features include real-time analytics to help you make smarter shipping decisions, automated tracking, and delivery updates, and integrated carrier management tools to help you identify carrier-specific optimizations.

LateShipment.com also offers a comprehensive dashboard that allows you to track all your shipments in one place. This feature helps you keep track of all your orders and ensures that you never miss a delivery. Additionally, LateShipment.com provides a customer communication platform that allows you to send automated delivery updates to your customers, keeping them informed every step of the way. With LateShipment.com, you can streamline your shipping process and provide your customers with a seamless delivery experience.