A few months ago, we asked, “will Amazon Buy with Prime replace FedEx and UPS?” In that post, we cautioned shippers not to neglect their relationships with the major carriers quite yet. We’re not going to say, “I told you so,” but Amazon’s latest move shows they’re on track to follow in UPS and FedEx’s footsteps instead of blazing a new trail in the shipping industry.
On August 16, Amazon announced that, while assessing the “busy holiday shopping season, we expect greater utilization of our fulfillment network. Across the supply chain, this creates increased operating costs during this holiday peak period.” As a result, it will “introduce a holiday peak fulfillment fee from October 15, 2022, to January 14, 2023.”
In the 300-word release, Amazon notes two times that other major carriers also impose this peak delivery surcharge. Should you write off Amazon completely? Let’s learn more about their peak delivery charges and how they compare with FedEx and UPS.
At the beginning of August, FedEx announced that their peak surcharges would go into effect on September 5— earlier than ever before. The peak surcharge ranges from $1.50 to $2.50 per package for FedEx Ground® Economy Package Services.
Comparatively, Fulfilled By Amazon (FBA) customers in the US and Canada will see an average increase of $0.35 per item sold. The tech company says their “fulfillment fees during this peak period will remain an average of 30% less expensive for slower standard shipping methods than other major third-party logistics providers.” The release also says their fees will be “an average of 70% less expensive than comparable two-day shipping alternatives.”
At the beginning of the year, Amazon reported a loss of $3.84 billion for the first three months of 2022, compared to 2021’s first quarter profits of $8.1 billion. Now, the tech company is adding peak surcharges and scheduling a second Prime Day in the fourth quarter. The move to assess a peak surcharge seems to be an opportunity to boost the bottom line with minimal penalty as both of the private carriers will be implementing something similar. Little risk – High reward.
A well-kept secret you should know about: you can negotiate your contract with the major carriers at any time. If you haven’t renegotiated your contract recently, there’s no better time than the present. Knowing where to begin your negotiations is difficult without knowing what others are paying. The team at ShipRx began our careers writing contracts for the major carriers, and now we’re helping shippers like you cut down on costs. We’ll review your current agreement for free, and you won’t pay a cent until you save money.
Another way to cut down on shipping costs is through parcel audits. Our proprietary parcel audit software verifies over 40 different factors to guarantee you receive all the refunds you deserve.
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