Higher Shipping Prices Have Arrived
Online and small retailers have another issue to contend with this holiday season into 2022. As if supply chain/inventory issues and labor shortages were not enough.
The Big Three Shippers — Federal Express, United Parcel Service and the U.S. Postal Service — have or will rise prices for the crucial selling period that will surely by plagued by stock outages due to supply chain issues in Asia and at U.S. ports.
For the first time in eight years, Federal Express is hiking annual shipping rates above 4.9 percent, raising them an average 5.9 percent for 2022 starting Jan. 3. Meanwhile, the U.S. Postal Service, which initiated delivery slowdowns on Oct. 1 to shore up its finances, is increasing parcel rates by $0.25 to $5 for the Oct. 3-Dec. 25 period. The amount of the temporary price hikes will be determined by type of delivery service and the distance a parcel needs to travel.
Having already raised fees and added surcharges to some large parcels during the COVID-19 pandemic, UPS is expected to reveal its annual price adjustments sometime in October. Experts believe the carrier will keep lockstep with FedEx with a 5.9 percent hike.
Large brick-and-mortar retailers are more insulated from the price increases, especially as they drive more customers to BOPIS (Buy Online, Pick-Up in Store) during the season. But smaller, more ecommerce-reliant retailers will be more exposed to the delivery service price hikes, a factor that could hamper their margins and profits in Q4.
The shipping price hikes arrive amid the persistent supply chain woes, which have included factory shutdowns in Vietnam and dozens of import container ships stuck off the Ports of Los Angeles/Long Beach, predictions of significant holiday sales growth.
Deloitte, for one, is forecasting a 11-15 percent year-over-year increase in U.S. ecommerce sales for the 2021-22 holiday season to $210-218 billion, and the market’s overall holiday retail sales to rise 7-9 percent. Although consumers’ disposable personal income is projected to remain flat, the consulting firm thinks persistent uncertainty fueled by the pandemic may fuel higher spending on merchandise.