FedEx Rate Changes: How You Can Use Pack & Ship to Avoid Overpaying for Shipping
With big changes coming to FedEx (and other carriers’) shipping rates this upcoming new year, 2022 is going to be off to a bumpy start for many businesses along the supply chain.
If you haven’t already heard, shipping rates across just about every major carrier are going in one direction: up. This isn’t only to account for the current widespread supply chain issues but also for things like inflation and currency dynamics. Federal Reserve Chair Jerome H. Powell recently stated that these supply chain difficulties are “likely to last longer than previously expected, likely well into the next year.”
Businesses need to prepare now for the changes to come and, fortunately, a little planning can go a long way towards reducing your shipping costs, providing a consistent customer experience, and getting ahead of your competition.
Prepare for FedEx’s Largest Rate Hike in the Last 10 Years
According to FedEx’s recent announcement, changes will begin as early as November 1st, 2021 with fuel surcharge increases to FedEx Express, FedEx Ground, and FedEx Freight shipments. This is due to the wide-reaching effects of the COVID-19 pandemic, especially with respect to the supply chain, including:
- A global shipping container shortage
- Countries locking down and opening up
- Major port congestions and closures
- Unpredictable changes in labor force
- A lack of practical alternatives to ocean freight
- The rising cost of fuel and the surge in demand
This shift places enormous pressure on both merchants and retailers in the midst of what is projected to be the biggest shopping season ever. Black Friday sales are expected to reach an all-time high of $17 billion. For reference, that number was $11.9 billion in 2019 and $14.3 billion in 2020.
Then, following the holiday season effective January 3rd, 2022, shipping rates will increase by 5.9% on average, and as high as 7.9% for certain freight shipments. The last time rates increased this dramatically was when FedEx increased Ground rates by 5.9% in 2011. FedEx will also add a number of new surcharges for oversized packages, some deliveries and returns, and international out-of-area deliveries, to name a few.
With UPS and DHL following suit with similar rate increases, retailers and suppliers are in for a cold fall and winter, especially since they already have plenty of other difficulties to overcome. Even if the virus were to be miraculously eradicated today, the many long-lasting effects throughout the supply chain are projected to stick around beyond Powell’s assessment, until 2023.
While it may seem that little can be done to offset these shipping costs, there are, fortunately, multi-carrier shipping software solutions like TrueCommerce Pack & Ship designed to streamline your fulfillment process and keep shipping costs low.
What Is Pack & Ship and How Can It Keep Your Shipping Costs Low?
Put simply, multi-carrier shipping software is a powerful solution that automates key shipping processes and integrates with your existing software suite to optimize your ability to fulfill shipments.
Pack & Ship is designed to eliminate three major logistics problems: juggling numerous manual processes, managing relationships with different carriers, and reconciling information between your backend systems consistently. By using an integrated solution, you reduce the risk of human error and increase your productivity by automating activities like:
- Creating and printing labels
- Auto filling 3rd-party billing accounts
- Designating carriers based on customer preferences
- Auto-tagging orders based on predefined values
- Using cartonization to know which carton to select based on order items
- Sending ASNs to the right customers/channels
- Generating shipping manifest reports and end-of-day reports
So, if you want to implement a multi-carrier shipping solution or you already have one, then how can you use it to keep shipping costs low despite the upcoming rate changes?
1. Ensure Accurate Deliveries and More Efficient Workflows
Start saving money by improving your shipping speed and accuracy. Multi-channel solutions are made to optimize your workflows, much of which you can automate, thereby ramping up efficiency (reducing time and labor spent along each step in the process) and cutting down the potential for inaccurate information. Creating a standardized process like this allows you to see where your business is already most efficient and, perhaps more importantly, where there is room for improvement.
You can use built-in pack verification and street-level shipping address validation to ensure that you ship the right products in the right quantities to the right locations. Some solutions, like TrueCommerce’s, also support image-guided and scan verification. With all of these measures in place, you can drastically reduce costly returns, chargebacks, and shipping errors.
2. Optimize and Consolidate Shipments
You’re also able to save time and money by easily creating, tracking, and shipping a batch of orders with a few clicks of a mouse, utilizing the ability to add or remove from orders on the fly, or processing rush orders with a quick ship button that expedites fulfillment.
Another major benefit is that the software can help you find better ways to plan and package your shipments via cartonization. By calculating the size of each product in your shipments, you can use it to optimize your packaging and pallet utilization. One way this can reduce costs is by minimizing the size of your boxes. Carriers like FedEx use calculations for dimensional weight by box size, and charge you that price if it’s more than the actual weight of your products. Shipping solutions can automatically suggest the proper box based on the items in an order to minimize DIM weight.That way, you no longer have to worry about those excess dimensional charges, which can add up quickly in the small parcel world.
3. Use Analytics to Predict and Negotiate the Best Rates
Pack and ship solutions can come with powerful, built-in shipping analytics that aggregate information from across your different shipments. If you’re not utilizing your analytics, you’re missing out on one of the most useful features of consolidating your solutions into one place. Your access to data may include:
- Channel performance by the number of sales and highest average order value
- Region or location performance by the number of orders placed or shipments received
- Which carriers you use the most, including how much you spend or ship with each one
- Number of shipments completed or in progress
- Your spend per shipment per pound
- Key performance indicators for your fulfillment teams
- How long it takes for shipments to reach milestones
- Deeper drilldowns into various metrics, sorted by channel, carrier, warehouse, shipping location, date, etc.
Based on your shipment data, you can then make strategic decisions on which carriers and shipping options you choose. Unhappy with the rate increases at FedEx? Providers like TrueCommerce empower you to use dynamic rate shopping to reduce shipping spend while meeting your delivery commitments. By factoring in transit times, you can easily select the lowest cost service within a single carrier, or even across multiple carriers to avoid overspending.
Choosing the Right Technology for Your Business
While navigating shipping rate changes and market fluctuations, finding the right technology partner can help you consistently reach your shipping goals and provide a positive experience for your customers. If you want to learn more about how to choose the right solution provider and save on shipping costs, contact us today.
About the Author: Josh Wayne is Vice President of Commerce Products at TrueCommerce and a supply chain expert with 17 years of experience developing integrations for shipping & fulfillment, eCommerce, EDI, and more. Today, he oversees Product and North American eLearning for our eCommerce platform, storefront integrations, and multi-carrier shipping software. Josh lives in Columbus, OH, and in his spare time he is an active volunteer with the Boy Scouts of America. When not at work or volunteering, you can find him out on his Harley or in the woods hiking and camping.