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Blog / Will UPS & FedEx hike rates to offset declining e-comm volume?
2 minutes read

Will UPS & FedEx hike rates to offset declining e-comm volume?

In March 2020, as the COVID-19 pandemic spread across the globe, shops closed their doors. People went inside, opting for online shopping over brick-and-mortar experiences. Experts estimate that the pandemic was responsible for an additional $102.08 billion spent on US eCommerce in 2020, for a total of $762.78 billion spent. That’s an increase from 2019’s eCommerce spending of $578.50 billion.

On May 5, Mastercard released its SpendingPulse report for April 2022, which announced a year-over-year increase of 7.2% in total retail spending in the US. Compared to 2019, that number is up 15.3%. 

That number looks great, but let’s dig a little deeper. When comparing eCommerce sales from April 2021 to April 2022, that number is actually down 1.8%. If your business relies on eCommerce, you may have noticed a dip as customers race to go back to shopping in person. In-store sales have increased by 10%, meaning you’ll likely see a drop in the number of packages you need to ship soon if you haven’t noticed a change already. 

The news reports declines in both eCommerce sales and the prices of shares of popular eCommerce stocks. A few of the brands affected? Etsy stocks dropped 17%, Shopify shares decreased by 15%, and Amazon’s shares recently neared their lowest close since May 2020. As these brands fall short of expectations, we’re curious about how UPS and FedEx will respond. 

Pandemic spending was significant for the carriers. In February, UPS announced its expectations for 2022 revenue to hit $102 billion– smashing its 2023 goal a year early. In a message to its shareholders about the fiscal year 2021, FedEx announced record profits and a record revenue of $84 billion. Their success depends on the continuation of eCommerce sales.

In order to meet the demands of in-person shoppers, your business may need to pivot once more– just like in March 2020. It’s impossible to predict how the carriers will react to a decreased number of parcels being shipped. Thankfully, there are ways to prepare your business no matter what happens. 

First, make sure you’re not paying too much for shipping. If you haven’t negotiated your contract recently, let the team at ShipRx review your current one. If we think you can save money, we’ll help you negotiate your contract and lower your shipping costs. Alternatively, we’ll tell you if you’re already paying the lowest possible rates. We don’t get paid unless you’re saving money, so you can be sure we’ll tell you the truth. 

Next, make sure you’re not leaving money on the table. When the carriers fail to uphold their shipping agreements, they owe you a refund or credit. Sign up for the ShipRx parcel audit software to track your shipments and recover refunds. It’s free to sign up, and you only pay when we discover refunds on your behalf.

We live in uncertain times, but you can be sure you’re not spending too much on shipping when you work with ShipRx.

Todd
Todd Partner
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