Minimizing the new carrier surcharges coming in February

Minimizing the new carrier surcharges coming in February

Two weeks ago, FedEx announced a new peak 30-cent-per-package surcharge that will take effect February 15th, and continue until further notice. The fee applies to businesses that shipped more than 30,000 packages per week in January. This, after both FedEx and UPS added surcharges multiple times in 2020.

The new fee is a blow to many retailers who increasingly depend on ecommerce for the bulk of their sales, and have to contend with relatively tight margins and the demand for free shipping. In light of the capacity shortage and growing costs for carriers during the pandemic, these fees aren't terribly surprising. That doesn't make it any easier on shippers.

One way to reduce the impact of these new costs is to employ a cartonization solution that can account for them when it determines cost-efficient packing solutions. In practice, because the 30 cent surcharge is per package this might mean different breakpoints for when it's cheaper to ship an order in one box or two.

Let's look at an example. There's an order I have to fulfill with 10 items of varying sizes. They fit snugly into 2 small boxes, or in 1 large box with a little room to spare. Before February 15th and the surcharge takes effect, it might have made more sense to use the 3 small boxes to avoid the $0.50 dim fee on the large box. After February 15th, I'm on the hook for an extra 90 cents if I choose the 3 small boxes again, making the large box cheaper.

That example may seem like an edge case, and while this one is completely made up, these are the kinds of savings opportunities that Paccurate routinely hunts down. We can tell you from experience that they add up very quickly.

If you investigate anything over the next 2 weeks, it should be whether you can already automate this kind of cost optimization. Or let us show you how Paccurate automatically factors surcharges and fees into its calculations, without getting in the way.

For more information about cost-optimal packing, check out our white paper on the subject and let us know what you think!

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