Canadian retailers are grappling with higher shipping costs as couriers add hefty fuel surcharges to shipping rates to recoup record gasoline prices.
Additional charges increase the cost of shipping goods to Canada, exceeding 40% for some carriers.
For stores with high online return rates, such as clothing and footwear companies, rising shipping costs can be especially difficult.
So far, most businesses are trying to absorb the extra domestic shipping costs, Retail Council of Canada spokeswoman Michelle Wasylyshen said.
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With inflation squeezing consumers and an ongoing battle for dollars online, she said retailers were reluctant to pass on costs.
“Retail is one of the most competitive industries in Canada, so raising minimum free shipping thresholds or adding surcharges directly to consumers is often done as a last resort,” she said.
“Retailers would rather find savings elsewhere.”
Higher domestic shipping costs come as international freight costs are finally starting to level off.
Retailers have essentially traded more reasonable international freight rates for higher shipping within Canada, experts say.
“The idea of always being balanced around fuel or container prices or what’s happening with global supply chains is long gone,” said the president of Indigo Books & Music Inc., Peter Ruis, in an interview.
Indigo, which has seen online sales soar during the pandemic, is also avoiding raising prices despite skyrocketing shipping rates.
“We’re absolutely clear that, especially right now with inflation and the way customers are feeling…we won’t want to raise prices,” Ruis said.
Instead, the company is focusing on developing the ability to ship from local stores, rather than a centralized warehouse, to reduce shipping costs.
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“In October, we are launching our new website which will have a ship-from-store facility, meaning we can use all of our stores as a warehouse for the online consumer,” Ruis said. “If someone is in Halifax, we might choose to ship the product to them from the store in Halifax rather than the center (distribution center) in Toronto or Calgary.
He added: “In a situation where fuel costs are really difficult, we can mitigate that by sending stock locally.”
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Apparel retailers, which often see the highest return volumes among retailers, also seem determined to avoid passing on fuel surcharges.
Canadian underwear and apparel brand Knix Wear Inc., which does most of its sales online and offers free return shipping on most orders, said it has no plans to change the threshold. qualification for free delivery.
“We know that several external factors affect shipping and costs, but we don’t want our customers to feel these impacts,” said company spokeswoman Emily Scarlett.
Shipping surcharges vary between different courier companies.
A FedEx spokesperson said the shipping company manages fluctuations in fuel prices through “dynamic fuel surcharges.”
Fuel surcharges on shipments to Canada are subject to weekly adjustments based on a rounded average of the Canadian retail price of diesel per litre, James Anderson said in an email.
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For out-of-country packages, the company bases its fuel surcharge on a rounded average of the U.S. Gulf Coast spot price for a gallon of kerosene-type jet fuel, he said.
The FedEx Express fuel surcharge is currently 41.50% in Canada and 26.50% on international shipments.
DHL Express said it applies the fuel surcharge to compensate for fluctuations in fuel prices, which can impact the cost of transportation services, particularly for the company’s airline fleet.
The fuel surcharge for international shipments is set at 25% for July 2022, according to the company’s website.
Canada Post’s fuel surcharge on domestic services is currently 37%, while its international parcel service is 21.75%, according to its website.
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