In my day job I deal a lot with shipping and freight charges. There are a lot of factors that go into the recent increase in shipping costs:
- You should be aware that much of the overnight and larger LTL shipping that the USPS now does is contracted with FedEx. Frankly has better infrastructure and ability to move the product than USPS does.
- New Federal mandates for trucking went into effect Jan 1 that require electronic/digital reporting units to be installed in truck cabs. Average cost is estimated to be around $10,000 per cab. The reporting/control units more accurately report the drivers hours and restrict their ability to drive over the allowed time. Should a driver exceed the time the unit restricts the speed that the truck can travel allowing them only enough to reach the next exit or rest stop. The added cost needs to be passed on to the consumer and many Mom & Pop companies as well as independent drivers who could not afford the mandated installs have chosen to park their rigs instead.
- There has been a significant increase in "weather events" the last couple years that have cause either a lot of delays in scheduled shipping or a lot of rigs to be diverted to disaster relief efforts. Delays in scheduled trips have a trickle down effect in the amount of transit space available. Diverted rigs aren't available at all. It's the old theory of supply and demand, when the demand is higher than the supply the cost of the product, in this case shipping, goes up.
- About a year ago, it was estimated that there were about 6 drivers available for every 10 loads. After the Jan 1 mandates and the loss of many owner/operators as well as the net weather effects, it's now estimated that there are 3-4 drivers available for every load.
Just take a look at the semis you see going down the road on your next drive. See how many of the have ads on the back for drivers wanted. Around here it's rare to see a semi that isn't advertising. Same listening to the radio. On the stations I listen to I hear at least one ad an hour for some freight company touting how they're willing to train, what great benefits they have and how large their signing bonus is.
I'm not trying to justify the higher rate and especially not agreeing with them. Just trying to make clear that it's not as likely that someone is trying to profit from them as it is they are a real cost.
And the next time you opt for "free shipping," ask your self just how free it really is. The seller you're buying from is not loosing money on the deal and they certainly aren't doing you a favor because they like you so much. You're paying, You're just not seeing the real cost because you choose to believe it's free.
I'm not judging either. I'm a Prime member. I am, however a realist.
