Shipping Rate Increases: Why They Happen and How to Prepare
Inflation is inevitable in most modern economies. Prices for goods and services gradually (or not so gradually) increase due to higher production costs and other reasons, and shipping rates are not an exception. The good thing about shipping rate increases is that they rarely occur unexpectedly and therefore you can prepare for them.
Postal and courier companies, even state-owned ones, are businesses, so they need to earn enough to cover their operating costs (wages, fuel, etc.) and at least break even, if not make a profit. Naturally, they increase their rates every now and then to keep up with inflation.
There are two main types of shipping rate increases: the general rate increase (GRI) and peak season surcharges. The GRI is an annual increase in shipping rates that all or most carriers implement at the beginning of each year to account for inflation and rising operating costs. It might seem unexpected to occasional shippers, but those who use shipping services often know about the GRI and are prepared for rate increases when they are implemented.
Postal and courier companies adjust their shipping rates according to market conditions such as inflation, shipment volumes, etc. Shipping rate adjustments implemented by the United States Postal Service (USPS) are reviewed and approved by the Postal Regulatory Commission before they take effect. Private carriers do not need rate approval, but they can’t increase their rates too dramatically if they want to stay competitive.
The annual general rate increase is usually announced around September or October and comes into force in late January so that businesses and the general public have time to prepare. Although most shipping prices typically see an increase, it is usually uneven: some shipping services are affected by the GRI more than others, and some may be not affected at all. Rate increases may vary depending on the shipping service, package weight, zone, and other factors. Certain types of packages may see a small shipping rate decline even though the average rates increase.
Peak season surcharges are applied during peak seasons, just like the name suggests. Shipping carriers apply them to compensate for inflated freight cost caused due a high shipment volume, a shortage of manpower, and other factors. Seasonal shipping rate increases in Western countries usually occur right before and during the winter holiday season; like the GRI, they are announced in advance.
Peak season surcharges can also be applied during unexpected peak seasons that occur due to unforeseen circumstances. For example, many carriers applied surcharges during the COVID-19 pandemic because it resulted in a reduction of cargo capacity and a lack of manpower. Those surcharges were qualified as peak season surcharges.
So how do you prepare for seasonal and annual shipping rate changes? If you run a business, you will need to adjust your shipping prices accordingly (if you don’t offer free shipping), increase product prices to absorb the increased cost of shipping, increase your minimum order value/quantity to help offset the increased shipping cost, negotiate a deal with your shipping carrier, or take other measures to optimize your shipping strategy. Don’t forget to notify your customers about changes beforehand so that they don’t come as an unpleasant surprise. There’s also the option of doing nothing, but if you choose it, be ready for your revenue to take a hit.
If you’re just an occasional shipper, you need to brace yourself for the upcoming shipping rate increase and maybe look for ways to get shipping discounts that can range from promo codes and free shipping coupons to discounted shipping labels. While looking for the best way to save on shipping, keep in mind that coupons and promo codes can only be used once and usually have an expiration date, so the best way to get a shipping discount is to print shipping labels online. For example, you can save up to 25 % on USPS and UPS shipping labels if you print them with PostageMaker. The exact amount of your shipping discount will depend on the shipping service and package size.