Blog Posts Peak Season Surcharges Put Pressure on High-Volume Shippers
With more consumers working and shopping from home due to COVID-19, ecommerce deliveries to residential areas have skyrocketed. To help offset the cost of handling increased order volume, both FedEx and UPS recently implemented peak season surcharges. Companies shipping a high volume of orders directly to consumers will bear the greatest burden from these new fees.
What are the newest surcharges from FedEx and UPS?
FedEx imposed temporary peak season surcharges on June 8, 2020, following the lead of UPS who instituted similar charges May 31st.
Following is an overview:
- FedEx SmartPost: A $0.40 surcharge is applied for every package.
- FedEx Express or FedEx Ground: If you ship 40,000 or more residential packages per week, a $0.30-per-package surcharge will be applied when order volume exceeds 120 percent of your typical weekly volume.
- UPS Ground Residential and UPS SurePost: When your weekly volume exceeds your average weekly volume for February 2020 by more than 25,000 packages, a $0.30 per-package surcharge will be applied.
- Oversized packages: When you ship packages that exceed 96 inches in length or 130 inches in length plus girth, you’ll pay $30 per package for FedEx and $31.45 for UPS.
These changes come on the heels of earlier announcements from both carriers. In March, UPS and FedEx suspended delivery service guarantees indefinitely. In April, they implemented a surcharge on international parcel and freight shipments.
More detail on peak season surcharges is available on the carriers’ websites:
How will these peak season surcharges affect your business?
In order to determine what the new changes mean for your operations, you’ll need to assess your shipping volume. How many residential packages you are sending and where? Parcel analytics software can help you understand your current shipping patterns and identify trends.
Analytics information also can help you evaluate the potential impact of changing carriers or modes. Would changing carriers offer a potential for cost savings? Is the prospective carrier able to handle additional volume? Are there other postal workshare options available? Would you benefit from a multi-carrier strategy?
Armed with this information, you will be better prepared to negotiate with your carrier(s). While avoiding the surcharges altogether is unlikely, you might be able to convince them to delay implementation.
The peak season surcharges will remain in place indefinitely. If you’re unsure how best to navigate the changing parcel landscape, consider enlisting the support of an experienced third-party provider. They’ll have the knowledge and resources to help you make the best decisions for your business.
To learn more about optimizing parcel management, read our latest whitepaper.