If you’re concerned with carrier rate increases, holiday surcharges, and other rising shipping costs eating into your bottom line, a new survey from Parcel shows you’re not alone.
Rates charged by FedEx, UPS, USPS and other carriers exert extraordinary influence over the profit margin of businesses. As yearly rate increases and a greater array of surcharges command a larger price tag, executives can find themselves scrambling to make up the difference.
Each year, Parcel’s Carrier Performance Survey asks readers about a variety of topics, including why shippers switch carriers, the importance of regional players, and other key topics. Parcel also tracked responses regarding carrier complaints, the health of the shipping industry, and the impact of transportation costs on the future.
This year’s study revealed price increases are starting to push shippers away from the major carriers, despite satisfactory service. Here are some other key takeaways from the survey.
Making The Switch To USPS
One of the most interesting findings of the survey is that shippers are increasing their use of USPS, while cutting back on UPS and FedEx. When asked whether they used one of these three carriers to ship domestic parcels in the past 12 months, here’s how they responded:
- 84% said they used USPS, an 8% increase over last year
- 81% said they used FedEx, dipping 4% from last year
- 78% said they used UPS, a drop of 6% from last year
What’s causing businesses to move away from FedEx and UPS? It all comes down to one issue: pricing.
Accessorial Charges Top Carrier Complaints
Readers were asked to rate each carrier on a scale of one to ten on a variety of aspects. Results showed that while USPS saw an increase in use while FedEx and UPS saw drops, the major carriers outperformed USPS on every measurement surveyed except price.
These results, along with others discussed below, indicate that customers are prioritizing price over other qualities from their carriers – perhaps indicating concern over future profitability.
In fact, the biggest complaints customers had with carriers involved pricing issues. Accessorial charges were by far the biggest complaint from survey respondents, with just under 36% reporting it as the primary concern. The second biggest complaint was pricing in general, with 16% listing it as their biggest gripe.
Other top complaints about respondents’ primary parcel carrier:
- Service failures: 8.93%
- Customer service response: 7.14%
- Negotiating contracts: 5.36%
What Does It All Mean?
FedEx and UPS both experienced a drop in consumer use relative to USPS — despite outperforming USPS in every measure except price. Major carriers had the edge in customer relations, delivery performance, on-time services, refunds, and claims processing, but it still wasn’t enough to stave off a slide.
Why? The answer is clear: 66.67% of respondents said the need to achieve better pricing was the main reason why they switched carriers in 2017.
A majority of respondents also (52.46%) believe there is a lack of competition in the carrier marketplace, which is giving rise to unreasonable pricing schemes.
However, just because there is a lack of competition, does not mean that you are without options. Information is power — it was true in the Art of War, and it is true when you negotiate with your carrier.
Carriers rely on obscure information and a lack of data to charge their customers unfair rates. However, if you find benchmarks with similar companies who are shipping similar parcels, you can arm yourself with information to negotiate a more favorable rate.
Gain The Upper Hand
Reveel was founded in 2006 by former DHL executives to advocate for transparency within the industry and empower clients to achieve savings of up to 20%.
For more than a decade, Reveel has been a trusted partner for businesses looking to save money on shipping costs. Our industry benchmarks and Shipping Intelligence gives you the power you need to negotiate a better rate.
Curious how much money you’re leaving on the table? Sign up for a free audit of your shipping invoices.