It’s February – Time for Parcel Rates to Rise

Just as the Jan. 7 postal rate hike was about to go into effect, parcel carriers United Parcel Service and Federal Express announced rate increases as well. The UPS and FedEx rates go into effect in early February.

The one bit of good news for catalogers is that the parcel carriers’ rate hikes aren’t nearly as steep as those of the U.S. Postal Service. For instance, FedEx rates are increasing an average of 4.9%.

Meanwhile, rates for UPS ground will rise 3.1% on average for both commercial-destined and residential-destined deliveries. But the surcharge for UPS’s residential deliveries will increase 5%, to $1.05. UPS ground is cited as the primary carrier for standard shipments by 50% of the respondents to the 2001 Catalog Age Benchmark Report on Operations (which will appear in the March 15 issue). In comparison, only 3% of respondents use FedEx for standard shipments, though 25% use the carrier for express deliveries.

In January, the USPS raised the rate of a 1-lb. Priority Mail package – the weight represented by more than one-third of all Priority Mail packages – 9.4%, from $3.20 to $3.50. And it bumped up the rate for packages that weigh more than 2 lbs. by nearly 20%, from $4.30 to $5.15.

UPS looking like a bargain The Priority Mail rate hikes make UPS look like a bargain. Manchester, VT-based sporting goods and apparel cataloger Orvis, for one, intends to shift at least one-third of its parcel volume from Priority Mail to UPS, says director of operations Andy Travers.

“I rate-shop all the carriers by weight and zone to determine the most appropriate carrier for each package,” Travers says. “Plus, we’ve had customers complain about Priority Mail lately with packages taking more than a week to arrive instead of the two- to three-day window the USPS promises.”

Similarly, Faith Mountain may shift its Priority Mail packages to UPS. At press time, the Sperryville, VA-based gifts and apparel mailer was shipping more than 50% of its packages via Priority Mail, says vice president of operations Jim Eastham. “We’ll soon put the UPS rates in a spreadsheet, look at it by weight and zone, and have the computer add things up and choose the least expensive method for each package,” Eastham says.

The UPS rate hike wasn’t a surprise to catalogers; the carrier has raised its rates annually for 14 years now. In fact, scientific components cataloger Edmund Industrial Optics had implemented a 6% increase in its delivery charges, effective January, before UPS even announced its rate hike.

The government may soon be able to cash in on catalogers’ sales – both online and offline. A coalition of 29 U.S. states on Dec. 22 approved a plan to simplify their sales tax codes. This plan could pave the way for states to consistently and uniformly capture tax revenue from store, catalog, and Internet sales.

The member states (listed below) of the Streamlined Sales Tax Project voted 26-0 (with three abstentions) to approve the plan, which calls for third-party companies to determine and administer the sales tax on e-commerce and catalog transactions, in hopes that Congress will pass it into law this year. According to wire service reports, the plan will be sent to the National Governors’ Association and the National Association for State Legislatures for review.

While the debate about whether consumers should pay sales taxes when they buy products from online companies or catalogers based in other states is not new, the approved plan would streamline tax laws to apply to all sales from all channels. Catalogers are required to collect local sales tax only on sales from those states in which they have nexus, or a physical presence.

Under the streamlined tax plan, states would adopt a uniform model as to what types of products – such as certain foods and apparel – would be taxable. But the states would have flexibility in determining what rate of sales tax to charge. For example, one state could charge a 4% tax on all goods deemed taxable, while another might charge 8% on the same goods. And a state that charges 6% sales tax on retail store goods would be able to tax online and catalog sales at the sales rate.

THE 29 STATES PARTICIPATING IN THE TAX PROJECT ARE: Alabama, Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, Wisconsin, and Wyoming.

The Holiday Stocking: Cupboards Half Empty To see how well stocked the shelves were at distribution centers just prior to Christmas, Catalog Age’s Secret Shopper called 21 catalogers to check the inventory on 63 items. Out of the 63, 35 items were in stock, although Secret Shopper could not check inventory status at The Popcorn Factory (due to computer failure) and Spices Etc. (because, according to the order-taker, the system could relay stock status only after an item was ordered). The Sharper Image, Harry and David, Ross-Simons, and Garnet Hill were the only companies to have all the items requested in stock.

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