Shipping rates across major carriers have been on the rise. Rate increases can be disruptive in many ways including raising operational costs, reducing consumer demand, and the potential need to adjust inventory levels, among others. In addition, the rise in tariffs is boosting the cost of many goods, adding another level of expenditure that will have to be passed onto the end customer, absorbed by the organization or both.
So, how do fulfilment centers, ecommerce companies, manufacturers or other operations that are responsible for managing the shipment of parcels, manage? Automated parcel sorting systems can help. Let’s take a closer look at what we’re dealing with:
At the beginning of 2025 both FedEx and UPS implemented General Rate Increases (GRIs) averaging 5.9%. These higher rates applied to FedEx Express, Ground and Home Delivery as well as UPS Ground, Air, and international service. In January 2025 the United States Postal Service (USPS) announced increases of 3.9% for USPS Ground Advantage, 3.2% for Priority Mail and Priority Mail Express, and 9.2% for Parcel Select.
Tariffs of 10% - 25% have been announced on all imported goods to the U.S. and up to 145% tariff on some goods from China. This will result in higher costs for certain products and materials, putting further pressure on margins.
For ecommerce companies, manufacturers, and fulfilment centers that are currently processing parcels manually, automation can play a significant role in helping to offset the increased costs associated with shipping and higher priced products and materials. Automated parcel sorting systems can help make the process more efficient in a variety of ways. Here are just a few:
Automating the parcel sorting process means less workers will be required to do the task. This is one of the most significant cost benefits and it can be realized immediately upon implementing a system. Certain employees can be reallocated to higher value tasks when appropriate.
Automated parcel sorting systems enhance routing rule efficiency by rapidly and accurately sorting packages based on destination, size, weight, carrier, service or other criteria. This allows for optimized loading onto trucks for efficient route delivery. It also helps packages to be processed at a higher speed in a shorter amount of time, without adding labor costs. This is a key benefit during peak periods when organizations would normally need to bring in temporary labor that is costly and jeopardizes the quality of processing.
Sorting by carrier and service within some carriers is one of the key ways that automated parcel sorting systems help make the sorting process faster and more accurate. After package barcodes on shipping labels are scanned, the carrier and service level data and routing data are matched, and parcels are routed by carrier/service according to the software and logic-based rules built into the system. By sorting packages accurately, shippers have confirmation of the sorted parcels and the option of tracking packages to each container for the carrier and service.
Automation also helps to greatly reduce sorting packages to the wrong carrier. This can be a costly error as it can result in the delay and potential loss of the package. This leads to unhappy customers and can add to product replacement costs when the parcel needs to be replaced.
Carriers may be more willing to negotiate with an organization when they are sorting parcels with an automated parcel sorting system. Organizations that can sort, label and handle packages faster and more accurately become more appealing to carriers as it can lead to lower operating costs for them.
New carriers have entered the market in recent years that are competing with FedEx, UPS and the USPS. Some include smaller regional options that ship within localized geographical zones, and those that are targeting niches that cater to specific industries, such as moving medical goods, or refrigerated delivery. Data that automated parcel sorting systems capture can make negotiating with these carriers easier.
Automation systems can weigh and dimension each package, and store the data. If carrier surcharges are proving to be inaccurate and not lining up with the data that is being recorded, the records can be used to dispute them, and adjustments can be made to reduce these charges.
Automated parcel sorting systems have always been an economically viable tool for boosting efficiency and reducing costs. The latest shipping rate increases and uncertain economic outlook provide even more reasons why this type of equipment is worth investing in. You may not be able to control increased shipping fees and tariffs, but you have complete control over your internal operations and processes. Reach out to ID Parcel & Mail Solutions to learn more about automation.
