By 2025, it’s estimated that COVID-19 will have cost the world somewhere between $16 trillion and $35 trillion, according to a panel led by McKinsey. This is the rough equivalent to wiping two years of gross income off the average American taxpayer. Small businesses continue to count the personal and commercial costs of the pandemic, and once the stimulus support recedes – will be expected to rebuild and drive growth. Carefully planning spend within the most profitable areas of their business will be key to survival, but unexpected costs can derail the most structured of plans.


Price increases are inevitable but unwelcome for SMBs: in June 2021, the cost of living rose by the largest amount since 2008. Carrier prices are also on the increase. FedEx kicked off the 2021 increases on January 4 across services including Ground and Freight, charging late payment fees and additional handling costs for large packets. UPS announced new peak surcharges on July 4, with further changes expected in October. USPS announced its mid-year rate increase for mail, coming into effect on August 29. SMBs are already suffering, and unexpected shipping and mailing costs could have a devastating effect.


Has the pandemic influenced the carrier price increase?

Costs of mail and parcel handling and delivery have been rising for some time. Our Parcel Shipping Index charts U.S. parcel volumes at 8.6bn in 2013, rising to 14.7bn in 2019 – a CAGR of 11.5% over that time. The numbers for 2020 are due out in the fall, and it’s safe to say we’ll see another increase in volumes.


The sheer, unexpected volume of parcels over the past 18 months has added pressure to carriers already trying to manage growing volumes at scale. Carriers need to generate funds for investment in infrastructure and digital transformation, so they can deliver high levels of service as consumer behaviors change. The USPS has explained that its rate change will contribute to $40 billion of investments in people, technology, and infrastructure as part of its ‘Delivering for America’ 10-year plan.


Generally, carrier rates follow the consumer price index and have remained relatively stable. The cost of a First-Class stamp at the post office has been 55 cents for the first ounce since January 2019. In August it will rise to 58 cents. As we move forward and carriers continue to adapt in line with changing consumer behavior, we’re likely to see further increases.


What can small businesses do to protect themselves?

For small businesses, staying connected with customers through digital and traditional channels has been a lifeline over the last 18 months, and this will continue. Sending parcels has become the mainstay of many organizations, not just retailers and e-commerce companies but businesses shipping parcels to each other. Printed mail continues to drive value and action, and our own research has found that Generation Z, Millennials, and Generation X have all been sending and receiving more mail since the pandemic began.


Shipping parcels and sending mail can be complex with many different services to choose from, but staying on top of price increases is essential. Incorrectly priced mail and parcels can generate penalties, and risk customers facing charges and tariffs at the doorstep. Here are five ways SMBs like yours can protect budgets and minimize the impact of carrier price rises, now and in the future:


Understand your customers’ delivery expectations

Knowing your customers’ expectations around delivery is critical in your defense against price rises. Don’t assume everyone wants everything quickly: research has shown this isn’t always the case, and if you’re shipping everything using fast-track services when your customers are quite happy waiting a day or two longer, you’re spending unnecessarily. Research from BOXpoll found the majority of Millennials (58%) and Gen X (55%) prefer delivery guarantees to fast shipping.


Expand your choice of carrier

If you always choose services from the same carrier, now is a great time to compare what others have to offer. There is a huge variety of different products and services available to you. Cloud-based carrier management software makes it really easy for you to select the most cost-efficient services, based on delivery objective. You just need to enter your package weight, address, and any other requirements, and the software will present you with a selection to choose from. You can also buy postage and print shipping labels online to save you driving to the post office, and you can schedule free pick-ups too, or, if working from home, simply place items in your mailbox.


Track parcels

Forty-three percent of consumers are tracking deliveries more now than before the pandemic, while 67% of millennials track their packages daily or multiple times a day. Providing tracking on packages you send not only improves the customer experience, it can also reduce the ‘Where’s my parcel?’ inquiries you receive. Tracking also protects you from fraudulent undelivered package claims and ensures carriers are meeting delivery objectives. Parcel tracking doesn’t just benefit retailers and consumers – end-to-end visibility of a parcel’s journey provides clarity and reassurance whatever you’re sending.


Ensure pinpoint accuracy on parcel weight and cost

Our research found that historically, companies have overspent on shipping by around 13% every year. Using carrier management software will eliminate this risk: you have access to the very latest rates, so you can be assured you’re paying the right costs for whatever you’re sending without running the risk of surcharges. It also allows you access to Commercial Base Pricing, a discounted rate USPS gives to businesses that buy and print their own shipping labels from an online sending platform without volume requirements. This saves an average of 24% over meter or post office rates and offers tracking and free insurance.


Prepare for permanent hybrid working

It can be very hard to stay on top of your shipping costs when some of your employees are shipping and sending from home. As diligent as they are in recording what they’re spending, keeping track of these costs is labor-intensive and generally involves lengthy email trails and spreadsheets to manually input spend. With remote working set to stay research shows up to 20% of the US workforce will potentially be working from home permanently it’s important to find ways to gain transparency over these costs. Carrier management software platforms give you visibility of costs, enable you to track shipments and manage expenses across multiple locations, from a single dashboard.


While the world remains uncertain and forecasting is a challenge, it’s highly likely that carriers will need to continue to increase rates at regular intervals. Taking steps now to prepare your business will help lessen the impact and build a firm foundation for growth.


Jason Dies is EVP and President, Pitney Bowes Sending Technology Solutions.


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