Impact of the Current Recession on Shipping Costs....
International shipping options, usps shipping options, fedex shipping options
Everybody is aware of the current global recession and its effects on
various industries across the world. A major area to be hit was oil and
transportation.
With oil prices going up, it was but natural for shipping costs to be
affected too. Companies involved with transportation lost no time in hiking
up rates!
Let us take a look at what happened in 2008, as compared to the previous
year—
(1) Ground Commercial Zone rates increased by around 4.9%, as pronounced
by UPS; this meant a 5.0% increase of the one-pound rate. Beginning with
$3.62 in 2005, the charges had risen to $4.20 in 2008; this meant a hike
of 16% in just over three years!
(2) This was not all; UPS had further announcements to make. Commercial
Zone 2 combined with Ground Residential Surcharge rose to $6.15 minimum.
The heartening news was that at least 71% of the multi-channel companies
tried to keep the charges lower than this minimum charge, despite everything.
The customer benefited if his warehouse locations were nearby and he had
certain predominant Zones.
(3) Those who had small accounts did not suffer so much. But, a large
number of shippers also had shipments in Commercial Zones 4 and 5. So
they had to shell out a whopping 5.16% more for their freights! It worked
out to an average increase of 4.8% for 1-70 lb packages.
(4) Seeing this increase in UPS Ground rates, FedEx decided to go ahead
with increased rates too. It would now be 6.9% more for Air.
(5) The impact on shippers was great as a result, according to Rick Collins,
Managing Director of AFMS Logistics Management Group. While residential
fees were hiked by 5.4% for Ground, Commercial remote add-ons went up
by 7.1%. If one had to send irregular or large packages, the surcharge
amount could be anywhere between 8.3% and 12.5% (This was a 20% increase
as compared to earlier years).
(6) Some relief was awarded in this gloomy scenario by the Postal Service
Governors; they came up with new regulations on November 15, 2008! Future
mailing rates would be capped according to the rates of inflation—this
was in accordance with the Postal Accountability and Enhancement Act of
2006 and the Postal Regulatory Commission’s new rules introduced on October
29, 2008. Therefore, shipping
services would become more flexible in future—there would
be contract pricing and volume discounts on offer.
Of course, the recession has not receded and the costs of transportation
have not come down to the level expected by the people involved—but the
situation is somewhat improved as compared to the earlier depressing scenario.
