UPDATED for 2023 Shipping Rate Changes: how to prep & what to expect

When it comes to shipping, staying informed about current rates is crucial for ensuring that your customers are always aware of the latest costs and delivery times, and this year is certainly no exception. With inflation rates higher than ever, carriers such as UPS, UPS, DHL, and FedEx are definitely looking at an increase in costs which they will no doubt be passing along to you, the shipper.

In this blog is everything you need to know about these price changes and what’s to come, but more importantly, what you can do to stay ahead.

Read on for a full breakdown of the 2023 shipping price rates.

USPS

The following fee changes took effect on January 22, 2023:

• Priority Mail commercial rates increased by 3.6%
• Priority Mail Express service prices increased by 6.6%
• Priority Mail Flat rates increased by 3$
• First-Class Package Service prices increased by 7.8% 
• Parcel Select service prices increased by approximately 5.5%
• There is no price increase for Parcel Select Ground

It is important to note that these rate changes will vary between service levels and depend on where you print USPS labels. For a complete guide to USPS’s shipping rate changes, click here. 

UPS

The 2023 UPS shipping rates that went into effect on December 22, 2022, have seen an average increase of about 6.9% across the board, matching FedEx.

DHL Express

DHL Express wasted no time enacting their 2023 shipping rate increases by an average of 7.9% on January 1, 2023. 

FedEx

The 2023 FedEx shipping rates that went into effect on January 2, 2023, have seen an average increase of about 6.9% across the board. The exact increase percentage from last year to this year varies depending on the package’s size, weight, shipping destination, and shipping origin. 

It’s also worth noting that a delivery area surcharge of $13.25 will be applied per package for shipments traveling to specific ZIP codes within the contiguous 48 states. The exact amount of fuel surcharge will depend on market conditions and will be updated once more later this year on April 4, 2023.

A complete list of FedEx’s shipping rate changes can be found on their website.

Canada Post

The 2023 Canada Post shipping rates increased by an average of 4.0% domestically and 1.4% US and internationally on January 9, 2023. For a full guide on Canada Post’s shipping rate changes, visit their guide.

How You Can Save on Shipping in 2023

This year, shipping rate increases didn’t entirely roll back from the higher prices during the peak holiday season. However, shipment services will continue growing in price year after year. If you don’t want to fall behind, use these tips to stay ahead:

Free Shipping

If you offer Free Shipping here are some options available to you:

An Increase in product prices – If you’re still dead-set on maintaining your ‘free shipping’ options then an increase in product prices may be where you make up the loss incurred from the increased shipping costs. If you increase your products’ prices by the same percentage as these shipping increases you will maintain your magins. Although, your repeat and loyal customers may notice an increase in price, which could lead to an impact in their purchase frequency and shopping habits. This may be something worth A/B testing. 

You could just do nothing – If you choose this route then you’ll need to absorb the increased cost of shipping yourself. Confirm your margins and your profitability before taking this route. 

Consider a switch to ‘Free Shipping Minimums” – There is a compromise to be found between increasing your product prices and doing nothing. And that compromise is to add a free shipping minimum. This tactic has been shown to increase the average order value, which will help to offset the increased cost in shipping. This strategy will also pass along the cost of shipping directly to your customers if their order fails to reach the minimum threshold.

Flat Rate

If you offer Flat Rate Shipping here are some options available to you:

You could just do nothing – Same as with Free Shipping, if you choose to do nothing then you’ll have to eat the cost yourself. Confirm this plan’s sustainability and long term functionality. 

Adjust or introduce Order Value Ranges – There’s no rule that says your flat rates need to be the same for every order. Consider offering a higher flat rate on smaller orders and lower flat rates as orders and cart sizes increase. This will help off-set the increase in shipping costs. 

Increase product prices – If you increase your products’ prices by the same percentage as these shipping increases you will maintain your magins. Although, your repeat and loyal customers may notice an increase in price, which could lead to an impact in their purchase frequency. 

Increase Flat Rate Shipping – This increase may lead to similar results as an increase in product prices and it may impact your abandoned cart rates as customers will see this charge later on in the sales process. Consider altering the messaging and frequency of your Cart Abandonment emails if this is the path you choose.

Calculated Shipping Rate

If you offer Calculated Shipping here are some options available to you:

You could just do nothing – If you use a calculated rates provider or app and you choose to do nothing then these new charges will be automatically updated as soon as they are implemented. 

Decrease Product Price – Since your shipping rates are going to be automatically updated via your carrier extensions and applications a decrease in product price is an option. Once again, ensure that your margins are sustainable and pricing remains consistent and strategically in-line with the rest of your product line and your competitors.

Adjust for 2023 and beyond

While your current 2023 budget may need to be adjusted to account for some of these new charges, this might be a blessing in disguise. You could use this opportunity to rethink your entire shipping strategy from the ground up. If none of your calculations hit on your target margin, pricing strategy or shipping rate then it is time to go back to the drawing board. The team here at InteractOne is experienced and knowledgeable and ready to help craft a shipping strategy that works for you and your plans.