Small retailers in the US report a sharp rise in shipping costs — CNBC
In the United States, small and medium-sized retailers are preparing for the holiday season amid rising shipping costs, which, according to some sellers, could significantly reduce their profits. As CNBC reports, Kansas City business owner Jenny Shields paid an average of about $4.50 per shipping label last year, while last month the amount nearly reached $6 per package.
Shields, who sells hair accessories under the Evie Pearl Handmade brand, charges customers $6 for shipping. About $1.50 of that amount covers packaging materials, so due to higher shipping costs she is no longer breaking even and is covering part of the expenses herself. The entrepreneur is considering raising the shipping fee for the first time in six years, while noting that sales have already slowed because of these costs.
Reviewing shipping terms
CNBC notes that rising fuel prices following the February attacks by the United States and Israel on Iran have increased the cost of sea, air, rail and road transportation. Amazon reported an 11% year-on-year increase in shipping costs in the third quarter. According to Freightos, the average global air cargo rate is about $3.37 per kilogram, up 43% from the same period a year earlier.
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Todd Shelton, founder of the eponymous clothing company in New Jersey, began charging customers for return shipping this week for the first time, deducting it from the refund amount. He is also facing rising prices for Japanese denim and fabrics from Portugal. The company remains profitable, but higher costs have reduced its margin.
Holiday surcharges and demand
UPS, FedEx and the United States Postal Service have introduced seasonal surcharges, the amount of which depends on the type of package; they will remain in effect until the end of the holiday period. Such additional fees are common during the peak season, but they have increased in recent years.
At the same time, the National Retail Federation expects holiday sales to rise by 4.2% by the end of the year, to $1.01 trillion, compared with $972 billion a year earlier. Aaron Cheris, head of Bain & Company's global retail practice, said that part of this growth is explained by inflation: shoppers will spend more because of higher prices, rather than because they are buying larger quantities. In his assessment, record shipping costs are putting particular pressure on small sellers, while large companies have an advantage thanks to long-term contracts and their own delivery services.
