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Small Parcel Alert: Peak Season Residential Surcharges Coming from UPS, but not FedEx

This upcoming holiday season, many shippers will be paying more for deliveries made by UPS, however, FedEx rates will remain mostly the same. Here’s an overview each’s recent announcements.

UPS

During selected weeks in November and December, UPS will be introducing their new peak shipping charges. These charges, which were published on September 1, 2017, apply mostly to U.S Residential, large packages, and packages Over Maximum Limits. Shippers will need to be aware of these when they are shipping larger residential packages so they can avoid the peak season surcharges.

During last year’s holiday season, UPS’s daily volume was more than 30 million packages on more than half of the shipping days. The company hired almost 100,000 season employees during the peak season. It is expected that shipping volume will match or exceed that this year.

UPS explains that in order to meet the doubled daily volume during this busy shipping time, the higher charge will help ensure UPS keeps up with consumer demand and provides on-time delivery. Shipments that are larger, heavier, or unconventional shapes create more complex operations, adding to the cost per package to ship. Since UPS employs additional sorting and delivery personnel, increased air and truck cargo capacity, and temporary facilities during this time of year, the surcharge will go towards financing these additions.

The new peak charges for 2017 are as follows:

Small Parcel Alert Chart

For example, a package that weighs one pound in a Zone 2 shipment that ships via 3 Day Select will increase almost 10%---from $9.90 to $11.07. Multiply that by 100 similar boxes you need to ship, and you just incurred fees in excess of $110!

One concern for non-ecommerce customers is that the surcharge will impact them as well. These are customers that regularly use UPS and might be hit with the extra charge too. Those companies that do not do additional business during peak season, such as prescription drug businesses, will also be affected by the surcharge, even though their shipping volume will remain consistent.

What can shippers do to minimize the impact of the peak season surcharge?

  • Be aware of the sizes you are shipping and if they will be affected by the surcharge.
  • If possible, ship before or after the highest peak season time (December 17-23).
  • If you are taking orders past December 17th, consider charging more to the consumer to help absorb the cost.
  • When shipping packages that are larger than the published maximum size limits, consider UPS Freight.

FedEx

In an effort to undercut UPS during this important holiday season, FedEx announced that it will not be charging extra for residential deliveries unless the package requires extra handling. The company, which ships about 25 million packages during the busy season, will add a small fee of $3 for packages that need special handling and $25 for large items. While residential shipments represent a smaller share of the company’s revenue, they are increasing due to the growth of online shopping. It will certainly be interesting to see if FedEx does gain any residential market share by keeping their rates the same.

The growth in ecommerce has obviously increased the strain on both companies’ operations, especially during the peak season. It interesting to see the different approach by each leading into the 2017 Holidays. Chances are both will adjust again in 2018, but in the mean-time it’s important for all shippers to make sure they understand how these surcharges will affect their own shipping costs.


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