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Photo: The Canadian Press
Canadian retailers are grappling with higher shipping costs as couriers tack large fuel surcharges onto delivery prices to offset record gasoline prices.
The surcharge raises the cost of shipping goods within Canada, reaching 40 percent for some carriers.
For stores with high online return rates, such as apparel and footwear companies, increased shipping costs can be especially challenging.
For now, most companies are trying to absorb the additional domestic shipping charges, said Retail Council of Canada spokeswoman Michelle Vasilishen.
With inflation squeezing consumers and the ongoing battle for online dollars, she said retailers are reluctant to pass on costs.
“Retail is one of the most competitive industries in Canada, so raising minimum thresholds for free shipping or adding additional fees directly to consumers is often done as a last resort,” she said.
“Retailers would rather find savings elsewhere.”
Higher domestic shipping costs come as international freight costs finally begin to stabilize.
Retailers have largely traded more reasonable international container shipping rates for higher shipments within Canada, experts say.
“The idea of ever being in equilibrium around fuel prices or container prices or what happens to global supply chains is long gone,” said the president of Indigo Books & Music Inc. Peter Ruiz in an interview.
Indigo, which has seen online sales jump during the pandemic, has also avoided price hikes despite a sharp rise in delivery charges.
“We’re absolutely clear that especially right now with inflation and how customers are feeling … we’re not going to want to raise prices,” Ruiz said.
Instead, the company focused on developing the ability to ship from local stores rather than a centralized warehouse to reduce shipping costs.
“In October we are launching our new website which will have a store delivery facility which means we can use all our stores as a warehouse for the online consumer,” said Ruiz. “If someone is in Halifax, we can choose to ship a product to them from the Halifax store rather than the central (distribution center) in Toronto or Calgary.”
He added: “In a situation where fuel charges are really difficult, we can mitigate that by sending stock locally.”
Apparel retailers, which often record the highest return volumes among retailers, also appear determined to avoid passing on fuel surcharges.
Canadian lingerie 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 the threshold for qualifying for free shipping.
“We know there are several external factors that affect delivery and costs, but we don’t want our customers to feel those impacts,” company spokeswoman Emily Scarlett said.
Additional shipping charges vary between different courier companies.
A FedEx spokesman said the shipping company manages fluctuations in fuel prices through “dynamic fuel surcharges.”
Fuel surcharges on shipments within Canada are subject to weekly adjustments based on a rounded average Canadian retail diesel price per litre, James Anderson said in an email.
For out-of-state packages, the company bases its fuel surcharge on a rounded average of the U.S. Gulf Coast spot price for a gallon of jet-type kerosene, he said.
The FedEx Express fuel surcharge is currently 41.50 percent in Canada and 26.50 percent for international shipments.
DHL Express said it applies the fuel levy to offset fluctuations in fuel prices that can affect the cost of transport services — particularly for the company’s aircraft fleet.
The international fuel surcharge is set at 25 percent for July 2022, according to the company’s website.
Canada Post’s fuel surcharge for domestic services is currently 37 per cent, while international parcel service is 21.75 per cent, according to its website.
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