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Why so high?

A look at the cost of shipping packages to and from Alaska

Posted: Tuesday, November 28, 2000

Tens of thousands of Christmas packages will head into the state from hundreds of catalogs and Web sites in the next few weeks. But those deliveries can come at a high price - some companies tack on a surcharge for shipping to Alaska.

Alaska gets zapped with higher costs mostly because of geography, shippers say. The large air-freight companies typically use "distance-based pricing," meaning the farther away you are, the more you pay, said Susan Rosenberg, spokeswoman for United Parcel Service.

The freight carrier, which ships an average of 13.5 million packages a night and as many as 19 million during the Christmas rush, also factors in the amount of freight going to a destination, she said.

So a city such as San Francisco might be just as far away from a shipper as Juneau, but with fewer packages traveling to Juneau, parcels won't get the bulk big-city price break, Rosenberg said.

"You have to look at the density of operations," she said. "It's pretty sophisticated when we develop our rates."

UPS and Federal Express have limitations on their service to Alaska. Some delivery options aren't available to Alaska, and guaranteed overnight service has added delivery time.

In most cases, there is an added day to the delivery time so an overnight package might not arrive until noon of the second day.

Rural addresses also get charged more. FedEx charges an extra $11 to rural areas and an extra $100 if the package is more than 70 pounds. FedEx, which ships about one-third the number of packages as UPS, doesn't offer home delivery in Alaska.

However, some Outside retailers don't differentiate between Alaska and the contiguous states. Sumner, Wash.-based Recreational Equipment charges its on-line or mail order customers a flat rate for shipping, no matter the location.

So does catalog-sales giant Land's End. The company uses UPS to ship its clothing and outdoor gear to customers. Land's End charges the same as it does in the rest of the United States, but charges $16 more for upgraded shipping to Alaska, $10 more than upgraded shipping in the Lower 48, said Merlin Gorsline with UPS's home office in Atlanta.

Upgrading shipping usually only means saving a day or so on the package delivery, he said.

"I don't think it's worth it," Gorsline said.

But many companies still tack on an extra $10 to $15 to ship to Alaska.

Perkins, Okla.-based Lost Creek Mushroom Farm tacks on $14 for shipping its shitake mushroom logs to Alaska. The company ships its logs via UPS in the Lower 48, but goes through the U.S. Postal Service when shipping to Alaska, said Doug Williams who owns the business with his wife.

The logs are guaranteed to fruit or they will be replaced, but Alaska has a lower success rate than other states so more logs need to be replaced, Williams said.

That, and there's a different record keeping system, more handling involved and the logs have to be packaged differently, he said. The cost of doing business with Alaska customers is passed along accordingly, he said.

Outside businesses adding shipping charges allow some Alaska companies to be competitive.

Habitat, an Anchorage-based cookware and housewares retailer, charges its mail-order customers the actual cost of shipping instead of average shipping cost, said owner Irene Soucek.

"An average price doesn't work real well," Soucek said.

The company's Web site lists an inter-Alaska rate and a Southeast/Lower 48 rate, which are just guidelines but work about 90 percent of the time, she said.

The company ships a lot of merchandise Outside via the Postal Service's priority mail. Customers are often tourists who buy something and have it shipped home or were tourists, she said.

Unlike Habitat, Juneau-based Galligaskins has found that using a shipping average works better for them, said Gaile Swope who owns the business with husband, Rod.

The clothing retailer ships 200 to 250 packages a day with FedEx, and charging the actual shipping cost of each package would take too much time, she said. Galligaskins, which shipped out 460,000 Christmas 2000 catalogs, does a "tremendous dollar" volume of its business through shippers, Swope said.

"We would have to constantly weigh each package," she said.

Besides slowing down shipping, it's poor customer service, Swope said. Customers would not know their total purchase including shipping until the order actually arrived. Having a fee structure avoids double billing customers one for the merchandise and one for shipping and allows them to know the total cost when the order is taken, Swope said.

Galligaskins' fee structure was set up in relation to what the competition charged, then adjusted to roughly break even, she said.

"It's not really a place you want to make money."



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