It seemed inevitable that with a new labor agreement with Teamsters and significant wage and benefit increases in place, UPS would be looking to pass along as much of those new costs as possible to their customers in 2024. With their labor costs rising an estimated 8-9%, UPS will be increasing their basic ground and air parcel rates by 5.9%.
Earlier analyst estimates projected UPS rate increases to be anywhere from the 5.9% baseline set by Fedex to 11%-12% when including potential increases for fuel and other surcharges. This is on top of last year’s nearly 9% increase when factoring in surcharges. Freight Waves provides an analysis of the pricing challenges facing UPS here and here.
This latest round of increases by FedEx and UPS is another blow to retailers already squeezed by reduced consumer spending and rising labor costs. Online sellers will be forced to either absorb a margin hit to cover the increase or take the risk of passing those costs on to consumers in the form of higher shipping costs or higher minimum purchases for free shipping. In a world where more than half of consumers will abandon their carts if free shipping is not offered, this could quickly become a lose-lose proposition.
Luckily for ecommerce brands, the major carriers no longer enjoy a monopoly in most major metro areas. Shipping providers like AxleHire bring a viable alternative—faster delivery at lower rates—in the places where most of your customers live. Consider reducing the pain associated with rising shipping costs in the coming year by diversifying your carrier mix and reducing your dependence on the major delivery carriers.
You can start a conversation with an AxleHire logistics professional here.
Check out our in-depth analysis of major carriers pricing here for or more information.
