Prediction: 2019 Shipping Rate Climb

Prediction: 2019 Shipping Rate Climb

If your company ships goods, shipping rates are surely top of mind. After all, the rates you pay to ship products to your customers affect your cost profile and your overall bottom line. Based on current information below, our prediction: 2019 shipping rate climb.

As 2019 looms, so do higher FedEx and UPS shipping rates. In fact, these rate surges may end up being the highest we’ve seen in several years. As a preview, UPS recently proposed the highest stamp cost hike since 1991 for their 2019 annual increase.

There are multiple reasons why FedEx and UPS are set to announce significant rate hikes in the year to come. For one, both the labor shortage and Trump’s new corporate tax law are driving up the cost of labor, which UPS and FedEx plan to pay for via the annual increased rate. Also affecting businesses are higher interest rates and inflation. How do companies plan to make up for these costs? With higher product and service prices, shipping being one.

In addition, carriers are no longer subsidizing the high cost of home delivery with the more profitable business delivery. The result: e-commerce related shipping metrics will see steeper than average increases in rates.

At the same time, carriers are now taking ad-hoc rate increases throughout the year and have imposed seasonal surge pricing hikes. And both FedEx and UPS must pay for aircraft purchases and new infrastructure development to keep up with the fast-growing e-commerce market.

Specific to UPS, the company has been unable to put to rest several union-based collectively bargaining agreements (CBAs) across many of their employee classes. These include UPS hybrid delivery drivers, pilots, handlers, and aviation mechanics. To settle these CBAs, UPS will face significant costs, which they will pay for in part with our supposed prediction: 2019 shipping rate climb.

In the FedEx camp, the company missed their Q1 earnings per share estimate by a large margin. As such, FedEx will need to implement higher rates to drive up profits in 2019. Leading to our prediction: 2019 shipping rate climb.

Working together as the two shipping giants, FedEx and UPS plan to raise their rates at the same time, and by a similar amount. As a company that ships its goods, you will need to plan for these increases as you budget for 2019 and beyond.

A partner like Franklin Parcel takes the burden of these changes off your plate and works to negotiate with and rectify mistakes in the shipping service you receive, whether it’s with UPS hybrid delivery drivers or another carrier. Regardless of the fate of this new agreement, you’ll be covered.

Predicting the Impact of the 2019 Rate Increases on Your Shipping

Want to get an idea of how the 2018 shipping rate increases have already affected your bottom line? Franklin Parcel can help. Request a 15-minute consultation through the form below and Ben will help you streamline costs.