Spend Matters welcomes another guest post from Jon Winsett of NPI, a spend management consultancy focused on delivering savings in the areas of IT, telecom and transportation.
When it comes to annual carrier rate increases, there is little “new news” in carriers’ strategies to raise profits. UPS and FedEx have been raising base rates for 2013 shipments like clockwork, with an average rate increase of 4.9 percent. However, as in years past, the “average” rate increase is a bit misleading. Packages weighing 30 pounds or less (which constitutes the majority of shipments) will cost 7 to 8 percent more to ship in 2013 compared to 2012.
The only real surprise is the jump in surcharges and accessorial fees. In 2013, surcharges and accessorials will add historically high costs to base shipping fees. Just look at UPS’s residential delivery surcharge, which is nearly 10 percent higher than last year’s, or the 9.1 percent increase in address correction surcharges. These are just two examples of a long list of price hikes, and FedEx’s increases are similar in scope and impact.
If reducing shipping costs – or even simply maintaining your current spend levels – is a priority for your company in 2013, renegotiating accessorial fees and surcharges should be at the top of your to-do list. It’s one of the easiest things you can do to manage shipping costs.
Additionally, it’s important for shippers to gain a clear understanding of how each of these fees or surcharges impacts their unique shipping profile. What may seem like a routine rate hike can easily precipitate a spike in shipping costs. Minor adjustments in shipping methods, strategies and packaging can offset these increases or – even better – bring shipping costs below 2012 levels.