A shopper wipes a handle while selecting a shopping cart at an Ikea furniture store in Ottawa May 31. Justin Tang/The Canadian Press
Canadian retailers are struggling with high shipping costs as couriers face high fuel surcharges on top of shipping to recoup record gas prices.
The additional fee is shipping within Canada, which makes the cost of goods higher, up to 40 percent with some carriers.
For stores with high online return rates, such as B. clothing and shoe companies, the increased shipping costs can be a particular challenge.
So far, most businesses are trying to absorb the additional domestic shipping costs, said Michelle Vasilichen, a spokeswoman for the Retail Council of Canada.
With consumers staring at inflation and the ongoing struggle for the dollar online, retailers have been reluctant to pass on the cost, he said.
“Retail is one of the most competitive industries in Canada, so raising the minimum free shipping limit or charging consumers directly is often used as a last resort,” she said.
“Retailers would like to find savings elsewhere.”
Higher domestic shipping costs are coming as international freight costs finally begin to stabilise.
Experts say retailers have essentially traded cheaper international container freight rates for higher shipping costs within Canada.
“The idea of being in balance in terms of fuel prices or containers or what’s happening with supply chains around the world has been around for a long time,” Peter Ruis, president of Indigo Books & Music Inc., said in an interview.
IndiGo, which has seen a surge in online sales during the pandemic, is avoiding price hikes despite skyrocketing shipping costs.
“We’re absolutely aware of inflation and how customers are feeling right now…we wouldn’t want to raise prices,” Ruis said.
Instead, the company is focused on developing the ability to ship from a local store rather than a central warehouse to reduce shipping costs.
“In October we launched our new website, which will include in-store shipping, meaning we can use all of our stores as a warehouse for the online consumer,” Ruis said. “If someone is in Halifax, we can choose to have them ship products from a Halifax store rather than a central (distribution center) in Toronto or Calgary.”
He added: “In a situation where fuel tariffs are really tough, we can bring them down by shipping stock locally.”
Apparel retailers, which often see the highest returns among retailers, are also 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 its free shipping eligibility limit.
“We know there are many external factors that affect shipping and costs, but we don’t want our customers to feel that impact,” said company spokeswoman Emily Scarlett.
The shipping surcharge varies between different courier companies.
A FedEx spokesman said the line is managing fluctuating fuel prices with a “dynamic fuel surcharge.”
James Anderson said in an email that fuel surcharges for shipments within Canada are subject to weekly adjustments based on a rounded average of the Canadian retail price per liter of diesel fuel.
For packages outside the country, the company bases its fuel surcharge on a rounded average of the U.S. Gulf Coast spot price for a gallon of kerosene grade kerosene, he said.
The FedEx Express fuel surcharge is currently 41.50 percent within Canada and 26.50 percent for international shipments.
DHL Express imposes fuel surcharges to compensate for fluctuating fuel prices that could affect transportation costs – particularly for the company’s aircraft fleet.
According to the company’s website, the fuel surcharge for international shipments has been set at 25 percent for July 2022.
Canada Post’s fuel surcharge for domestic services is currently 37 percent, while the international parcel service is 21.75 percent, according to its website.
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