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Canadian retailers struggle with online shipping as fuel surcharges soar

Canadian retailers are struggling with higher shipping charges as courier companies add high fuel surcharges to their shipping charges to regain record gasoline prices.

Extra charges increase the cost of shipping goods withinCanadaand are over 40% for some carriers.

Increasing shipping costs can be especially difficult for stores with high online returns, such as apparel and shoe companies.

So far, most companies are trying to absorb additional domestic shipping charges, said Michelle Wassilichen, a spokeswoman for the Canadian Retail Council.

Read more: 'All dollars are important': Gasoline tax cuts in Ontario are some relief at record prices

With Inflation weighs on consumers and the ongoing battle for the online dollar keeps retailers reluctant to pass on costs, she said.

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"Retail is one of Canada's most competitive industries, so we've set a minimum free shipping threshold. Raising or adding extra charges directly to consumers is often done as a last resort, "she said.

"Retailers prefer to find savings elsewhere."

When international freight costs finally begin to stabilize, domestic shipping costs will rise.

According to experts, retailers are basically exchanging more reasonable international container freight rates for higher shipping within Canada.

"The idea of ​​balancing fuel prices, containers, or what's happening in supply chains around the world has long disappeared," said Peter Ruis, president of Indigo Books &Music Inc. Said in an interview.

Indigo, whose online sales surged during the pandemic, is also avoiding price increases, despite soaring shipping costs.

"It's absolutely clear, especially in the current state of inflation, and how customers feel ... we wouldn't want to raise prices," Lewis said.

Instead, the company focuses on reducing shipping costs by developing the ability to ship from local stores rather than from centralized warehouses.

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"We launched a new website in October. This website is a ship from a store facility. That is, you can use everything. Our store as a warehouse for online consumers, "Lewis said. "If someone is in Halifax, you can choose to send the item from the Halifax store instead of from the center of Toronto or Calgary (the distribution center)."

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He added: “In situations where fuel prices are very difficult, you can mitigate it by sending inventory locally.”

Apparel retailers may also see the highest returns among retailers. Many seem determined to avoid handing over fuel surcharges.

Canadian underwear and apparel brand KnixWear Inc. sells most online and offers free return shipping for most orders, setting a threshold for free shipping. He said he had no plans to change.

"We know there are some external factors that affect shipping and costs, but we don't want our customers to feel those impacts," said Emily Scarlet, a spokeswoman for the company. ..

Shipping charges vary by courier company.

A FedEx spokesman said shipping companies manage fuel price fluctuations through "dynamic fuel surcharges."

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Fuel surcharges for shipments within Canada are based on the rounded average of Canadian diesel retail prices per liter In an email, James Anderson said it could be adjusted weekly.

Read more: Nearly 7 out of 10 drivers can't afford gasoline because prices are soaring I am worried. For overseas packages, he said, the company sets fuel surcharges based on an approximate average US Gulf spot price for a gallon of kerosene-type jet fuel.

FedEx Express's fuel surcharge is currently 41.50% in Canada and 26.50% for international shipments.

DHL Express said it will apply a fuel surcharge to offset fluctuations in fuel prices. This can especially affect the cost of transportation services for the company's airlines.

According to the company's website, the fuel surcharge for international shipments in July 2022 is set at 25%.

According to the Canada Post website, fuel surcharges for domestic services are currently 37%, while international parcel services are 21.75%.

© 2022 TheCanadian Press