The latest in UPS’s litany of announcements for the New Year comes in the form of yet another rate increase. That’s right – as of January 4, 2016, a brand new 2.5% service fee will be applicable to the total charges on all packages that are billed to third parties.
There are a few possible reasons for targeting third party shipping with such an increase. It could be that billing disputes among sellers and buyers create extra work for UPS, requiring the company to devote more time to this sector. Work-at-home scammers’ penchant for building their schemes around drop shipping practices certainly doesn’t help matters either.
Regardless of the reasons behind the fee, UPS and FedEx typically make these types of pricing shifts in lockstep. Therefore, do not be surprised if a similar announcement comes from FedEx in the coming weeks. If your business depends on third-party shipping, this change could take valuable money out of your pocket, especially if you’re a retail seller who ships in high volume or offers special perks to customers like free or reduced shipping. Because you won’t be receiving any return revenue to make up for these additional fees, your profit margin will decrease. And the higher volume of packages you ship, the more those fees will add up to make a big difference.
“We are currently working with clients to quantify the effect that this new service fee will have on their overall spend,” Intelligent Audit EVP of Sales and Strategy Matthew Huckeba said. “From there, we can begin helping them craft strategies to shift volume away from the price increase or positioning them with the carriers to avoid this increase altogether.”
Now is the time to formulate your mitigating strategy. The best place to start is to make certain that you’re not mistakenly marking shipments as third party, and to prevent UPS from slapping the surcharge on any random package. Intelligent Audit will give your business the safety net it needs by ensuring that mistaken charges are caught and corrected.
Contact Intelligent Audit today to enlist the help of an auditing partner that has provided over 2,000 clients across multiple industries with trustworthy and effective cost management, analytics and reporting.