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TAMPA BAY, Fla. (CW44 News At 10) - Shipping industry experts are warning buyers and sellers to begin planning now for peak season shipments as shipping industry is facing new challenges in 2020 due to the pandemic. Experts say they expect major delays due to rate hikes and transportation predictions.
CW44's Andrea Alvarez spoke with A.J. Hernandez, the President and CEO of Skypostal Inc., based in Miami, Florida about what is facilitating such a sudden change in the industry. "Everyone's shopping from home. These volumes are here to stay and the infrastructures are not there to manage them."
July was a tough month for the shipping industry. International rates were raised confusing a marketplace that experts say was already struggling after the pandemic caused us shut down on international delivery. Hernandez explains, "What happened is the United States went to the governing body called the UPU and they said to the Universal Postal Union, 'You are no longer going to dictate. Either you allow us to set our own rates or we're leaving the UPU.' The argument was that it was cheaper to actually send something from China to the United States than it was from the east side of New York to the west side of the New York."
The UPU accepted the demands of the United States in 2019, ultimately causing shipping rates to spike.
"There's a 50% rate increase on average for all international services. Not only was there a rate increase, but there are also some services eliminated." Freight forwarders, like USPS, stopped delivery services across more than 100 international markets, sending thousands of businesses that depended on them scrambling to find ways to get shipments to their markets.'
"I was shocked, merchants that I spoke to in the last week of June, who did not know about the rate increase. We're talking about big, big merchants of sending thousands of shipments a day overseas,"
The good news, it creates opportunities for businesses like, Skypostal, Inc., who deal outside of the postal networks. The timing of the hike, Hernandez says, was everything but ideal for the industry as a whole. "Because of COVID-19, we're having Christmas volumes now, so I can only imagine what's going to happen during the peak season."
Eventually, the shipping rate hike trickles down to the consumers, which leaves Hernandez with one big piece of advice all around. "My advice to, to the buyers and the sellers is plan. Whether they're sending internationally or domestically, I think they need to add time because there are going to be delays." And those delays are result of transportation shortages across the board. "We're trying to plan and mitigate the risks of the lack of transport. And I think that this is going to be an industry wide challenge. And I'm talking about from planes to trucks to ocean, everything is going to be overburdened."
Hernandez added that this year will be different for shipments during the peak season. While you may be familiar with FedEx and UPS raising shipment rates, he says the USPS will be implementing peak surcharges for the first time ever this holiday season, which typically begins in October.
