Is Free Shipping Really Free? The true cost for carriers

The fight for free shipping is in full swing. Retailers are battling it out, offering seemingly endless promotions and minimum order thresholds to entice customers. While this may sound like a win for shoppers, the reality is a bit more complex for us in the carrier industry.

This relentless push for free shipping puts immense pressure on carriers. The "Fight for Free Shipping" article on Parcel Industry perfectly captures the competitive landscape. We want to quickly talk about the hidden reality incurred by carriers to fulfill these promises to shippers.

Although Excel Courier handles more time-critical deliveries than last-mile deliveries (click the link to learn more about the difference), the mindset of free delivery is a widespread consumer standard. It's important to see how it affects the supply chain.

#1. Free shipping isn't truly "free"

The cost is simply shifted from the customer to the shipper, which negotiates with carriers to get the lowest possible rates. This pressure translates to tighter margins for carriers, making it difficult to invest in infrastructure and technology – the very things needed to handle the ever-increasing volume of packages. 

From the article, "Of course, while shippers changing what they offer customers can make a meaningful difference on the balance sheet, that’s only half the equation. Carriers have complex, sophisticated pricing schemes designed to prioritize volumes that are most efficient for them to carry, while making shippers pay up for parcels that are not."

#2. Increasing Risks and Reducing Service

To keep costs down and meet tight delivery windows, carriers are forced to optimize every route and squeeze more packages onto trucks. This leads to an operational overload with overwhelmed delivery routes and a faster pace for drivers, potentially impacting safety and service quality.

Missed deliveries, damaged packages, and longer delivery times will reduce customer satisfaction and trust in your brand.

#3.  Dimensional Weight vs. Actual Weight

Carriers often base pricing on "dimensional weight," which considers the package size, not just the actual weight. Bulky, lightweight items offered with free shipping can disproportionately inflate costs for carriers.

A Sustainable Future for Delivery

So, what's the solution? We need a shift in focus from "free" to "fair."

Ultimately, a collaborative approach that values all parties—shippers, carriers, and customers—is necessary to create a sustainable future for delivery. The "free" shipping race may be good for short-term sales, but it's a race with hidden costs that could ultimately hurt everyone involved.

What are your thoughts?

Contact Excel Courier

If you are a business in need of a reliable same-day, time-critical courier service, Contact Excel Courier today for a free quote. We offer a wide range of options to ensure your urgent deliveries get there fast, safely, and on time.