The U.S. Postal Service, FedEx and UPS all increased rates over the past few months, which means higher costs for retailers and fashion apparel brands — especially as companies face ongoing growth of online shopping.
The increases come as shipping volumes are expected to grow. In a recent study by Pitney Bowes, global online shipping volume is expected to grow 20 percent by 2018. Here, Jeff Crouse, vice president at Pitney Bowes, discusses these trends as well as how companies can mitigate higher costs.
WWD: With recent carrier rate increases, what can fashion apparel, accessories and beauty brands do to help offset these expenses?
Jeff Crouse: As a leading global technology company, we have supported retailers across multiple industries in navigating challenges with rising rates, payment technology and methods, and evolving and rising consumer expectations for a connected experience. We are constantly in search for the right solutions to support our clients in gaining a competitive edge to stand out from the pack.
Based on our experience working with retailers of all sizes, we have seen some of the highest growth in parcel shipping over the last five years especially in the fashion apparel, accessories and beauty categories. For these businesses, including direct-to-consumer and retailer — shipping and mailing are mission critical when it comes to navigating the increasingly nuanced cross-border commerce world. With the carrier rate increases effective earlier this year, fashion apparel, accessories and beauty companies need to ship smarter and ensure that they are keeping pace with the changes in global e-commerce.
The recent rate increases across the three major carriers average between 3.9 percent to 4.9 percent. While that can translate into a significant expense on its own, it’s only part of the story. There are other fees and surcharges that grew even more. In fact, some of these charges increased 10 percent or more. Now you’ve got our attention.
In order to help offset these growing expenses, businesses need to ship smarter. The first step is to gain a clear view of your data — from how many parcels sent, to what carriers used. Armed with that data, businesses can implement a multicarrier strategy that matches the right carrier to the right package.
WWD: What else should companies consider?
J.C.: No carrier is perfect. Businesses shouldn’t limit themselves to just one carrier. By utilizing a multicarrier solution, businesses can compare a variety of options across the carriers to see which offers the best option. For example, for small parcels — under 3 lbs. — the [U.S. Postal Service] typically offers a substantially lower rate than the other major carriers.
Another factor to consider, especially with the increase in dimensional pricing, is the packaging. Don’t pay to ship air. Using the right sized packaging can save significant expense. There are also flat rate box offerings, where if it fits, it ships for one fixed price.
With continued growth in parcel shipping volume, which is expected to grow by 20 percent by 2018 according to the Pitney Bowes Parcel Shipping Index, we expect parcel shipping rates to continue to climb each year. Now is the time to optimize your shipping operation and ship smarter.
WWD: What does “multicarrier” management require?
J.C.: Implementing a multicarrier system can help you simplify your shipping operations and enable you to select the best carrier for every package, based on multiple factors, including customer delivery requirement, cost, service level, etc. For example, you may select a ground service for a parcel that isn’t urgent and overnight for an important legal document with a critical deadline.
It sounds simple, but with each carrier having different systems, service levels, rates, surcharges, etc. it can be very challenging to manage. Having access to all three major carriers from one system gives you the information to make the best decision for each parcel.
Multicarrier systems are now available via the cloud, which makes implementation fast and easy, without the capital investment and IT support needed in the past. These online solutions can now bring enterprise-caliber carrier management to small and medium retailers.
WWD: What are some of the financial benefits of metering mail? What is required?
J.C.: The best way to cut your mailing costs, to even below 2016 rates, is to meter your mail/parcels. Businesses using metered mail will enjoy a rate decrease for first-class mail to 46 cents. Compared to the new non-metered rate of 49 cents, that represents a 3 cent discount per piece — a significant savings for businesses of all sizes.
In addition to the discount, metering your mail has a host of additional benefits that can help you enhance productivity and accuracy, while simplifying your shipping, including getting always-accurate weighing and postage rates, automatic rate updates, auto ink replenishing, etc.
WWD: Pre-sorting mail and parcels can also save, but doesn’t it require a lot of work? What’s involved?
J.C.: Presorting your mail and parcels is a great way to reduce your overall mailing and shipping costs. But for many retailers, it makes sense to partner with a presort services provider to qualify for more significant postage discounts, streamline operations and simplify financial reporting. Partnering with a presort services provider not only reduces costs, it can help speed delivery.