The state of the shipping industry in 2024
The shipping industry has undergone significant changes and challenges in the past few years, especially in the wake of the Covid-19 pandemic and its impact on consumer behavior and demand. As online shopping surged, parcel carriers faced unprecedented volumes, capacity constraints, service disruptions, and increased costs. To cope with these pressures, carriers implemented various strategies, such as expanding their networks, investing in infrastructure, adjusting their pricing and surcharges, and diversifying their service options. Some of these changes are likely to persist in the post-pandemic era, while others may be reversed or modified as the market stabilizes. That said, we remain in a period of overall growth with “U.S. parcel shipping activity expected to grow 5% year over year for the next five years,” and “by 2028, annual U.S. parcel volume is expected to hit 28 billion,” according to a study from Pitney Bowes. All of this equates to the fact that “In the United States alone, 674 parcels are shipped per second, or 58 million parcels per day.” This equates to an average of 64 parcels per American per year. “ (Pitney Bowes, 2023)
With this kind of exponential growth in the market, and intense change and challenges in a short amount of time, the landscape has changed for jewelers and other businesses forevermore.
Shipping carrier changes and trends
Pricing Changes
Both FedEx and UPS implemented a general rate increase (GRI) of 5.9% for 2024. (Yaussy. MultichannelMerchant, 2023) This is lower than the previous year's record increases. However, this does not account for the various surcharges and fees that carriers impose on shippers, such as residential, delivery area, fuel, address correction, and signature confirmation surcharges. These surcharges can significantly increase the overall shipping costs, especially for shippers who send packages to residential addresses or remote areas. According to a recent Pitney Bowes article, “surcharges can make up between 20%-40% of annual shipping spend.” (Pitney Bowes, 2023) According to another article by Shipware, “additional handling surcharges are increasing 19.5% on average.” (Yaussy. Shipware, 2023)
Moreover, carriers use dimensional weight (DIM) to calculate the shipping rates, which means that the size of the package matters as much as the actual weight. Shippers who use large or bulky packaging may end up paying more than necessary for their shipments.
Packaging changes
As carriers charge more for the space that packages occupy in their trucks and planes, shippers are incentivized to use smaller or more efficient packaging. Many e-tailers have transitioned to soft packaging, such as plastic envelopes or bags, which have a lower dimensional weight than corrugated boxes. However, this also comes with a trade-off, as soft packaging is more prone to damage, loss, or theft than corrugated packaging. For jewelers who ship valuable or fragile items, using soft packaging is likely not worth the risk.
Delivery changes
Carriers have also adapted their delivery methods to accommodate changing consumer preferences and expectations. For instance, carriers have expanded their access points, such as drop-off locations, lockers, or retail stores, where customers can pick up or return their packages. For safety reasons and to ensure that insurance coverage remains in effect, jewelers should select an option that ensures their valuable cargo never leaves the carrier’s possession. Use of drop boxes, lockers or locations within a retail store for delivery causes a risk for gaps in insurance coverage and therefore should be avoided.
Package fraud and theft on the rise
One of the major challenges that the parcel shipping industry faces is the increase of fraud and theft. This can take various forms, such as porch piracy, package pilfering, robberies, or social engineering. Two of the most common issues are porch piracy and social engineering.
Porch piracy
Porch piracy refers to the theft of packages from the customer's doorstep or mailbox, which is often facilitated by following delivery vehicles or tracking numbers.
- An estimated 119 Million Packages were stolen off porches in the past year. (Edwards. Safewise, 2023)
- Packages that porch pirates steal most – Amazon, 55.5%, Fedex, 25.4%, USPS, 23.4% and UPS 22.6% (Alpert. MarketWatch, 2023)
- Package thieves poached more than $8 billion in merchandise over the past year. (Adkins. Security.org, 2024)
To avoid the risks associated with porch piracy and to keep shipping costs low by avoiding residential fees, deliver packages to carrier facilities that will hold packages for pick up by your consumer recipient.
Social engineering
Social engineering refers to the manipulation of people to obtain information or gain access to packages, such as impersonating customers or delivery companies. All these types of fraud and theft can result in significant losses, damages, or liabilities for shippers, carriers, and customers .
Recent social engineering examples in the jewelry industry
The Jewelers Security Alliance has recently received numerous reports of fraud involving callers faking identities to have high-end orders shipped, and in some cases, a caller impersonating a store manager or employee of another jewelry branch requesting items to be shipped right away, with the intention to divert the package to a different address. (Jewelry Security Alliance, 2024.)
Recently, another report explained that a team of cons posed as a jewelry store employee, and coordinated with a third-party courier to divert packages in transit. (Jewelry Security Alliance, 2024)
Finally, while the volume of packages has increased, it’s likely the value of packages has increased as well, making numerous targets even more tempting. Additionally, the value of packages may increase during the holidays, due to gift-giving. (Alpert. MarketWatch, 2023)
How to Avoid Social Engineering Fraud
- Secure your tracking numbers. Within your organization, limit access to tracking numbers only to authorized personnel. Be wary of emails, calls, or texts asking for tracking numbers.
- Add restrictions to your business’s carrier account to reduce the risk of bad actors being able to redirect your shipments.
- Train your employees to recognize the tactics used in social engineering scams and empower them to report any suspicious activity to a designated individual within the organization.
Online retail and returns fraud
A growing problem for jewelers is fraud involving online purchases and returns. According to a recent article by ekata, in 2023, there was $743 Billion worth of retail returns and 7% of all returns were fraud and abuse, resulting in a total of $101 Billion in losses to merchants due to fraud and abuse. (ekata) A typical scheme involves a customer buying jewelry online, then requesting a return. However, instead of sending back the original item, the customer might:
- Swap the jewelry: They replace the purchased piece with a fake or worthless item.
- Divert the package: They tamper with the return label so the package gets picked up by someone else, not the jeweler.
Effect of shipping trends on commercial insurance
The changing trends in the parcel shipping industry have also affected the commercial insurance market, as shippers and carriers face new or increased risks and liabilities. For instance, the rise of fraud and theft has increased the demand for insurance coverage that protects shippers and carriers from the losses or damages caused by these crimes.
Best jewelry shipping practices and tips on avoiding fraud for 2024 and beyond
To avoid the risks of fraud and theft, shippers should follow some best practices, such as:
- Use secure and appropriate packaging, and words and markings on labels and boxes that do not reveal the contents or value of the package.
- Use reliable and reputable carriers, and avoid third-party or unknown carriers that may not have adequate security or service standards.
- Use signature confirmation, or adult signature service, or other tracking features that provide proof of delivery and receipt of the package.
- Use insurance coverage, such as JM Shipping Solution which provides compensation in case of loss, damage, or theft.
- JM Shipping Solution can provide cargo insurance for all carriers in one place, and offer real-time guided choices based on identifiable risks. The safety of your shipments is our top priority.
- Strictly limit procedures allowing changes of address on shipments, and ensure these restrictions are in place with your carrier account.
- Be cautious in giving out the tracking number of a package. In the wrong hands, it can be used by fraudsters to re-direct the shipment to a different location. (Jewelry Security Alliance, 2024.)
Conclusion
The shipping industry is undergoing rapid changes and facing immense challenges, and we want to help you navigate them with confidence and ease. JM Shipping Solution is not just a software platform, but a trusted partner that supports you in optimizing your shipping operations, lowering your costs, and increasing your customer satisfaction. Whether you need to ship domestically or internationally, track your packages, manage carrier invoices, or streamline your workflows, JM Shipping Solution has the features and capabilities to suit your needs. Streamline with a solution that keeps up with the latest trends and innovations in the shipping landscape. Click here for more information on JM Shipping Solution!
Works Cited
“$86K in Packages Stolen from Sacramento-Area Jeweler Intercepted, 2 Arrested.” Jewelers Security Alliance, jewelerssecurity.org/86k-in-packages-stolen-from-sacramento-area-jeweler-intercepted-2-arrested/. Accessed 27 Feb. 2024.
Adkins, Matthew. “2023 Package Theft Annual Statistics and Trends.” Security.Org, 30 Jan. 2024, www.security.org/package-theft/annual-report/.
Alpert, Lukas I. “Holiday Jeer: Package Theft on the Rise, with 113 Million Boxes Stolen in 2023.” MarketWatch, MarketWatch, 21 Dec. 2023, www.marketwatch.com/story/holiday-jeer-package-theft-is-on-the-rise-with-an-estimated-113-million-boxes-stolen-in-2023-dcbc8de1.
Edwards, Rebecca. “Worst Metro Cities for Package Theft for 2022.” SafeWise, 13 Feb. 2024, www.safewise.com/blog/metro-areas-porch-theft/.
Identity, Mastercard. “Return Fraud: The $100 Billion Problem Facing Retailers.” Ekata, 29 Feb. 2024, ekata.com/blog/return-fraud-the-100-billion-problem-facing-retailers/.
Farrell, Billy. “UPS 2024 General Rate Increase.” Shipware, 16 Oct. 2023, shipware.com/blog/ups-2024-general-rate-increase-what-to-know/#:~:text=Matching%20rival%20FedEx’s%20General%20Rate,earlier%20on%20December%2026%2C%202023.
Pitney Bowes Parcel Shipping Index 2023 Featuring 2022 Data, Pitney Bowes, Stamford, CT, 2023, https://www.pitneybowes.com/content/dam/pitneybowes/us/en/shipping-index/23-mktc-03596-2023_global_parcel_shipping_index_ebook-web.pdf. Accessed 27 Feb. 2024.
“Take Command of Your Shipping: 7 Game-Changing Ways to Save.” Pitney Bowes, Pitney Bowes, Inc., 25 Jan. 2024, www.pitneybowes.com/us/blog/seven-ways-to-save.html.
“Widespread Scam Hits Diamond, Jewelry and Watch Industry.” Jewelers Security Alliance, jewelerssecurity.org/widespread-scam-hits-diamond-jewelry-and-watch-industry/. Accessed 27 Feb. 2024.
Yaussy, Paul. “Fedex 2024 General Rate Increase: Key Takeaways.” Multichannel Merchant, 11 Sept. 2023, multichannelmerchant.com/operations/fedex-2024-general-rate-increase-key-takeaways/.
