Shipping Software Reviews: Fuel Surcharge Rate Increase Nov. 2, 2015

Written by Caroline Rua on Tue, Nov 03, 2015 @ 11:27 AM

shipping_software_fuel_surcharge.jpgShipping Software Reviews: Shipping Fuel Surcharge Rate Increase Effective Nov. 2, 2015

While fuel prices are at their lowest level in years at the pump, shippers using carriers like UPS and FedEx will be subject to a fuel surcharge rate increase effective November 2, 2015.  This rate increase by FedEx and UPS will impact businesses' bottom line just in time for the busy holiday shipping season.  Traditionally, e-commerce companies, retailers and other shippers expect a base rate increase each year in December and January.  This unexpected increase in the fuel-surcharge index makes it difficult for businesses to accurately estimate and plan their shipping and pricing strategies going into the busiest shipping season.  

Why did FedEx and UPS make this change and not USPS?

One explanation is offered in a Wall Street Journal article "FedEx and UPS have been scrambling to boost their profits as their customers shift to email for sending urgent documents, instead of paying a premium to overnight them. Though e-commerce has taken off, margins on that business are narrower because of the higher costs of making deliveries to scattered homes."  In contrast, the USPS has the infrastructure in place to accommodate the increase of home deliveries.

What can a business do to avoid extra charges? 

Unexpected increases in shipping charges puts shippers in a profit margin squeeze especially when more and more consumers expect free shipping in many cases.  Here are 5 things businesses can do to try to reduce their shipping costs:

  1. Re-evaluate your shipping carrier mix with a shipping rate analysis
  2. Don't forget the Dimensional (DIM) Weight consideration, this could be impacting your bottom line
  3. Offer a better returns process with USPS Pay-On-Use return shipping labels
  4. Explore other packaging options
  5. Consider saving time and money with an integrated shipping software solution

Please call 800-462-4016 or email our V-Technologies' team if you would like to learn more about how to save money with our automated shipping solutions: StarShip and ShipGear. 

Watch this recorded webinar to learn more on how to save on shipping this holiday season.

Photo courtesy of by ddpavumba

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