The major carriers such as FedEx and UPS may raise their rates for a variety of reasons, including:
Increased demand: If there is high demand for their services, carriers may raise their rates to take advantage of the situation and increase their profits. This explains rising costs around the Christmas holiday season when online shopping is at its peak.
Rising costs: If the cost of fuel, labor, or other resources increases, carriers may need to raise their rates to cover those additional costs. Currently, fuel costs are at all time highs and labor is hard to come by.
Regulatory changes: If there are changes in regulations or laws governing the industry, carriers may need to raise their rates to comply with those changes.
Competition: If there is increased competition in the market, carriers may need to lower their rates to remain competitive. However, if the competition is low, carriers may raise their rates without fear of losing business to their competitors.
Inflation: Inflation can increase the cost of doing business, and carriers may need to raise their rates to keep up with the rising costs of goods and services.
Ultimately, the reason carriers are raising their rates depends on a variety of factors that are specific to each carrier and the industry in which they operate. But you can take action to lower your rate by negotiating the terms of your contract. LJM Group specializes in carrier contract negotiation and can save your business tens of thousands of dollars each year so you can reinvest those savings where needed i.e. more inventory, better equipment, more staff, etc.
There are several ways you can try to lower your shipping rates with carriers:
Negotiate rates: Contact your carrier and try to negotiate a lower shipping rate. If you have a good shipping volume or a long-term relationship with the carrier, they may be willing to give you a better rate.
Consolidate shipments: Consolidating multiple shipments into one can often result in lower shipping rates. This is because carriers can fill up their trucks or containers more efficiently, reducing their costs and passing on the savings to you.
Use a third-party logistics provider: A third-party logistics provider (3PL) can help you find the best shipping rates by leveraging their relationships with multiple carriers. 3PLs often have access to volume discounts and can help you consolidate shipments to save on costs.
Optimize packaging: Packaging materials can add to the weight and size of your shipment, which can increase shipping costs. By optimizing your packaging, you can reduce the size and weight of your shipment, which may result in lower shipping rates.
Use shipping software: Shipping software can help you compare rates from multiple carriers and choose the most cost-effective option for your shipment. Some software even includes features that can help you optimize packaging and consolidate shipments.
Overall, it’s important to regularly review your shipping rates and explore different options to find the most cost-effective solution for your business.