As of January 26, the 2020 shipping rates have all taken effect. Merchants are beginning to settle in and adjust to paying a little more to ship packages. Not all merchants are fully aware of exactly what changed and how they should best adapt. If you haven’t already, our E-commerce Seller’s Guide to the 2020 Shipping Rate Changes gives you a full breakdown of the changes and what they mean. In this article, we’ll give you the short and sweet version.
2020 shipping rates: what changed?
The short answer: compared to the massive changes in 2019, not much has changed this year. 2020 USPS shipping rates increased an average of only 3.5% across services, which is much less than last year. Part of that is because of the major overhaul in 2019 of First-Class Package Service, which went from flat rate by weight to zone-based shipping by weight.
While paying more to ship a package is never good news, e-commerce merchants can rejoice in the fact that USPS didn’t make structural changes or increase rates to an excessive degree. For example, the aforementioned First-Class Package Service rates only increased by 2.4% on average.
Get a full deep-dive overview of the 2020 rate changes in chart form by checking out this article.
FedEx and UPS Daily Rates increased their shipping rates by an average of 4.9% across services. This is in-line with the rate increases both carriers have implemented over the past couple of years. When it comes to FedEx and UPS, however, simple rate increases aren’t where things are problematic. The problem is the fees and surcharges that get added to the increased rates, which show up on invoices later.
Fees could be more of a problem in 2020
The vast majority of e-commerce packages are destined for home delivery. With USPS, this doesn’t matter. Packages are delivered wherever USPS delivers. When it comes to FedEx and UPS, merchants have to pay Residentia Surcharges for packages delivered to home addresses rather than businesses.
UPS increased residential air services by 3.5% and residential ground services by 3.8%. While this doesn’t sound like much at first, when you compare that to how much it adds to your package shipment, it can feel like a lot more.
- UPS Ground, 2 lb to Zone 2 shipping rate: $8.89
- UPS Ground with Residential Fee added: $8.89 + $4.10 = $12.99
- FedEx Ground, 2 lb to Zone 2 shipping rate: $8.89
- FedEx Ground with Residential Fee added: $8.89 + $4.65 = $13.54
- USPS Priority Mail, 2lb to Zone 2: $7.64
Even before the residential surcharges kick in, USPS offers a better shipping cost and likely a faster delivery for this zone. Once the surcharges are added, you’re looking at almost double the shipping cost of using the USPS option.
The above examples don’t even take into account Fuel Surcharges, which add even more to your invoice. There are other fees to consider as well when you use FedEx and UPS to ship. Another such cost is the “Additional Handling” fee which can be added to packages that surpass a certain threshold. This year, UPS reduced their qualifications for the assessment of Additional Handling surcharges down to 50 lbs from 70.
Take a look at the below note from an actual ShippingEasy customer.
“For us, a 50 lb box from Peoria, Illinois to NYC is around $33. However, a 51 lb box has an additional $24 for “additional handling” fees! We had around 10 of these boxes — and each were just a few ounces over 50 lbs. So, we pulled a little product out of each box and added it to a small box. Otherwise, it would have been $240 in this new fee alone!!!”
—Eric Pollitt, Global Hemp
Splitting packages is also a great strategy, particularly when your package is large, which would trigger dimensional weight charges (shipping rates charged based on the size of the package rather than the physical weight).
It’s also worth noting that flat rate options like FedEx One Rate and UPS Simple Rate exist, which do not include additional fees like fuel surcharges.
Your vertical and product still really matter
Though the 2020 shipping rates are increasing across the board, there are certainly still opportunities to optimize and save. Certain shipping methods may seem like they lend themselves to your vertical or industry, or specifically to your products, but diggina a little deeper can illuminate opportunities to save.
Let’s take a look at one of the verticals we highlight in our E-commerce Seller’s Guide to 2020 Shipping Rate Changes: automotive parts. This data is taken from real ShippingEasy customer data and are the kind of things we look for when guiding our customers how they can optimize and save.
For many buyers of automotive parts, more so than most products, time sensitivity is high. Whether it’s a regular customer who needs a part to do their own repairs or a repair shop trying to get their customers’ vehicles back to them as soon as possible, they don’t want to wait.
See how ShippingEasy customers save time and money on shipping, inventory, and email marketing in these case studies!
For that reason, you might see UPS and FedEx used, thanks to the fact that they can guarantee a delivery by a certain time. That being said, Priority Mail Express is still an overnight shipping method with high reliability, and can yield substantial savings over FedEx Overnight and UPS Next Day Air.
Even in instances when FedEx Ground and UPS Ground are used, Priority Mail offers modest to moderate discounts while potentially even getting a package to its destination in a more timely manner. FedEx Ground and UPS Ground can be anywhere from 2-5 day delivery, whereas Priority Mail is referred to by USPS as a 2-3 day service.
One of the best parts of ShippingEasy’s platform and service is that we help you make smart decisions. Whether it’s setting up automation to choose the best shipping methods, navigating the 2020 shipping rates, or optimizing your package options over the phone, ShippingEasy has you covered. Click below to take us for a spin, FREE for 30 days!