Shipping costs are headed higher than a New York City skyscraper. No thanks to the high price of energy, which contributes to rising transportation costs. Record high oil prices have offset decades of trade liberalization efforts. When you consider the rising cost of shipping raw materials and finished goods, distance to market and carrier discounts will play an increasingly larger role in business decisions.
The cost of shipping a standard 40-foot container from Shanghai to North America’s east coast has almost tripled from what it was in 2000. Back then, oil was $20 a barrel; today, it’s hovering at $100, with steep rises expected due to the political unrest in the Middle East.
Online retailers, faced with the ever-increasing cost of shipping, have had to come to grips with the fact that the cost of sending FedEx and UPS packages rose last month. In addition, USPS filed plans to raise rates for First Class and Standard Mail rates in April.
Merchants are now paying 25 cents more for a USPS Priority Mail Small Flat Rate Box. In addition, they will pay up to 15 cents more per package for USPS Media Mail beginning April 17, 2011. Better carrier discounts will be all the more important for companies seeking to reduce shipping costs.
Most businesses will be forced to pass along higher shipping costs by raising shipping and handling fees or by raising the price of their product. If companies are unable to improve their carrier discounts the only other option will be to absorb the higher cost of shipping. Not a pleasant prospect in these tough economic times. A comparison of FedEx vs UPS rates can help you identify the best carrier for your business.