In a move that has raised concerns among small and medium-sized enterprises (SMEs), the UK postal service fees will see a significant uptick in 2024. Key players in the market, including the Universal Service Provider (USP) and Parcelforce, have announced rate hikes that will profoundly impact SMEs that depend on affordable shipping to thrive in an increasingly competitive e-commerce landscape.
Starting in 2024, USP is set to implement a staggering 10% increase on charges primarily related to large parcels and additional handling fees. Parcelforce, another major provider, has followed suit, citing rising fuel costs and the ongoing volatility in the labor market as driving forces behind the adjustments. These changes come at a time when SMEs are already grappling with a myriad of challenges, including inflation and fluctuating consumer demand.
Steve Zammit, CEO of Interparcel, stressed the necessity for SMEs to rethink their shipping strategies in light of these impending changes. “Mistakes that lead to surcharges can significantly increase the original shipping price by up to 150%,” he warned, illustrating that an initial courier charge of £10 could transform into a bill ranging from £22 to £80 due to mistakes made during packaging or handling processes. For SMEs, which often operate on thin margins, such increases could prove detrimental.
The crux of the issue revolves around efficient packing and shipping strategies. Zammit identified several costly packing mistakes commonly made by SMEs and underscored the importance of adhering to the dimensional and weight limits set by courier services. “Many products sourced overseas, especially those from regions like China, Vietnam, Taiwan, or Hong Kong, need to be packaged correctly upon manufacture to avoid repackaging later,” he pointed out. For example, couriers typically enforce weight limits ranging from 20 to 22 kilograms per parcel, with items exceeding 32 kilograms necessitating palletisation and forklift handling — both potentially expensive processes for businesses.
As e-commerce continues to flourish, it’s vital that SMEs ask the right questions about product dimensions and weight when placing overseas orders. “Some couriers apply surcharges for items over certain lengths. Often, 105 centimetres is the maximum before extra costs kick in, but this varies by courier,” Zammit added. Understanding these specifics could help SMEs tailor their packaging effectively, reducing potential surcharges.
Researching packaging options during the sourcing phase is critical. Zammit stated that one common pitfall for SMEs is neglecting to conduct thorough investigations into packaging needs during sourcing. Striking a balance between adequate packaging for customer satisfaction and minimizing shipping costs is crucial. He advised conducting as much of the packaging and tagging during the manufacturing stage rather than leaving it for the shipping phase to avoid labor-intensive processes that can incur additional charges.
Another pressing concern is to monitor items that require special handling. Zammit highlighted that items falling outside the automation limits of some courier companies would incur manual handling surcharges. If a parcel dimension, whether length, width, or height, exceeds the acceptable limits, it may need to be handled manually, increasing costs. He also mentioned that unusually shaped items may require custom boxes, which, while potentially costly upfront, can ultimately minimize the risk of surcharges, damage, or returns.
The concept of volumetric weight is another key aspect that SMEs must understand to navigate shipping costs effectively. “Couriers will charge you based on the higher of actual weight or volumetric weight. For instance, a one-kilogram item packaged in a large box could be billed at the volumetric weight of five kilograms,” Zammit explained. This practice can lead to unexpectedly high costs if not accounted for in the initial pricing strategy.
In light of these challenges, it is advisable for SMEs to regularly reassess their packing and shipping processes, especially during key business changes, such as introducing new product lines. “If new lines are added to your eCommerce store, analyze how that will impact your shipping costs,” Zammit concluded.
As SMEs prepare to face rising postal service fees in 2024, adopting smart packing and shipping strategies will prove crucial in mitigating the harsh realities of increased costs. By avoiding common mistakes, understanding shipping regulations, and reassessing their logistics strategies regularly, businesses can shield themselves from disruptions and remain competitive in the evolving landscape of e-commerce.
