Expect a Rise in Parcel Rates
Given supply chain disruptions, fuel hikes, and inflation, a rise in parcel rates shouldn’t come as a surprise. This of course increases the cost of doing business for Amazon sellers. Whether you use FBA or a third-party shipper, you need to understand and plan for rising parcel rates.
To help you do that, here’s our guide to parcel rates and surcharges for 2022.
- Tips to deal with rate changes
The United States Postal Service (USPS) parcel rates increase effective January 2022:
|Parcel Type||Parcel Rates Increase (percentage)|
|Priority Mail and Priority Mail Express||3.1%|
|Priority Mail International||3.7%|
|First-Class Package International||4.2%|
United Parcel Service (UPS) announced a general rate increase of 5.9% for 2022. However, there are surcharges that further up the overall parcel rates. For example:
- UPS Ground Commercial Rate Surcharge increased from $3.10 to $3.40, or 9.68%.
- UPS Ground Residential Rate Surcharge increased from $4.30 to $4.80, or 11.62%.
FedEx recently announced a general 5.9% increase, and that is also somewhat deceptive. Residential services actually rose 9.01% and FedEx Ground Delivery is a minimum hike of 10.8% for its parcel rates.
However, the biggest changes in FedEx parcel rates are added handling and oversized surcharges based on shipping zone. There are seven shipping zones, with the rate increasing at least 10% every two zones.
For example, a 20” x 20” x 25” box is likely to get slapped with at least a 34% additional handling surcharge at a higher zone. For FedEx Express and Ground, 2022 rates range from $110 to $145 per package, depending on zone, or up to a 38.10% hike over the 2021 parcel rate of $105.
There is no longer a flat fee for Oversized Home Delivery Charges, which are now also zone-based. The standard price of $130 increases anywhere from 3.85% to 30.77% based on the zone.
Yet another significant change is that in 2022 there is a FedEx Delivery and Returns Surcharge on packages delivered or returned through FedEx Ground Economy.
If you’re shipping large packages, expect a large increase in domestic charges. anywhere between an 8% to 13.79% increase for all residential. up to 16% for commercial. Additional handling charges for length and width, weight, and packaging is 5.20% to 9.37% higher in service price.
Oh, and don’t expect anything different for small packages. The minimum charge is now $9.62, a parcel rates hike of 9% over 2021.
Delivery Area Surcharges (DAS) based on zip code within the contiguous 48 states for UPS Ground Residential and UPS Ground Commercial also increase anywhere from 9.23% to 11.62%
The message here is that if you’re budgeting for a 5.9% increase in your FedEx expenses in 2022, you are underestimating the parcel rates.
DHL also announced a, you guessed it, 5.9% increase consistent with the other carriers. And like the other carriers, there are additional changes higher than that.
- Remote Area Pickup and Delivery: 7% increase to $45 per shipment or $.45 per pound, whichever is greater
- Residential Address: 7% increase to $5.30
- Address Correction and Change of Billing: 8%, $19.50
Amazon announced a 5% fuel and inflation surcharge fuel and inflation charge effective as of April 28, 2022. Also effective increase in fulfillment fees per unit based on size and weight tiers. Products that contain Lithium batteries incur an additional $.12 surcharge; televisions larger than 42 inches incur an added $42 surcharge. Refer to the Seller Central table for details.
Tips to Deal with Rate Changes
If you use third-party shippers, we recommend shopping for the best pricing for a given parcel rate category. If you ship in sufficient volumes, you might be able to negotiate a special rate. Also, consider looking into smaller regional shippers that might be less expensive and/or open to negotiated rates as an alternative in some cases to the major national shippers.
If you’re an FBA seller, well, there’s not much you can do to negotiate rates or explore alternative shipping options. You can, however, make sure you get your FBA reimbursements for mistakes Amazon makes in mishandling your inventory and fulfilling orders, or if any of your products were lost or damaged.
Amazon FBA reimbursements can average roughly anywhere from 1% to 3% of your annual revenues. If you made $500,000, Amazon could owe you anywhere from $5,000 to $15,000. That goes a long way to compensate for increases in parcel rates.
Unfortunately, Amazon doesn’t always issue automatic refunds. Use GETIDA (GET Intelligent Data Analytics) to be sure you get the FBA reimbursement you are owed. GETIDA software scans the last 18 months of transactions for possible FBA reimbursement. An experienced team of former Amazon employees can then file and follow up on your claims.
It’s also free to sign up for GETIDA. Even better, you can get $400 in free FBA Reimbursements to try them out. You are only charged a percentage of claims approved for reimbursement, and the first $400 of refunds are free of charge.