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Christmas in July? New UPS Surcharges Could Signal a Prolonged Peak Season for Shippers

UPS is imposing new surcharges across its services, hitting major shippers particularly hard.

The unusually speedy growth in e-commerce driven by the COVID-19 pandemic continues, as more consumers shift to online shopping despite the recent relaxation of pandemic guidelines. This growth puts persistent pressure on retailers and transportation companies alike to adapt without sacrificing customer service, resulting in an unrelenting strain on carrier capacity.

Looking ahead to the upcoming holidays, when another volume surge is likely to create an extended peak shopping season, UPS is again imposing surcharges across its services, hitting major shippers particularly hard.

According to FreightWaves:

“The holiday surcharges, which kick in Oct. 31 and run until Jan. 15, will, as they did in the 2020-21 cycle, whack UPS shippers that tender the highest volumes. In extreme cases, surcharges will run as high as $6.15 per package.

As they were last holiday, the specific surcharges will be based on how much a shipper’s weekly volumes during the holiday peak will exceed its average weekly volumes during February 2020.”

Many major carriers continue to experience network constraints, with several already close to capacity. The costly increases and carrier limitations will likely send shippers of all sizes scrambling for alternatives as they look ahead to Q4 and plan for capacity. The pricing surges from both UPS and FedEx are pushing many shippers into the arms of regional carriers.

To help fill the gap, as The Wall Street Journal reports, “Regional parcel carriers are expanding their reach as surging e-commerce demand fills up capacity at the national carriers and retailers seek fast, cheaper ways to ship packages to customers’ homes.”

Regional carriers like LSO and LaserShip have expanded into several markets across the U.S. this year to provide delivery services in new coverage areas, while investing in automation to help speed the flow of packages.

Facing limited capacity during the upcoming holiday season, many retailers should plan now by considering incorporating more local last-mile and regional carrier services into the mix. Growing its carrier network can help any business effectively tackle these challenges by introducing more options and capacity into parcel delivery efforts.

Implementing a multi-carrier shipping strategy can help businesses increase stability to quickly react to carrier surcharges and rate increases and effectively control costs. Logistyx offers an extensive carrier network that includes dozens of regional carriers – including LaserShip, OnTrac and Speedee Delivery – making it easier and faster to add and maintain carriers’ rates and services in a shipper’s carrier network.

By leveraging a cloud multi-carrier shipping system, businesses can provide a consistent level of service to customers despite the surging demand for carrier capacity by accessing and automatically comparing different carriers’ rates to select the optimal carrier service for each shipment.

Logistyx continues to offer strategic guidance and solutions for shippers seeking to adapt to these changes and effectively manage costs; explore the following white papers for more info:

Contact us today to learn more about how a cloud-based multi-carrier shipping system can help your business optimize parcel shipping ahead of peak season to help control costs.

As Market Conditions Evolve, UPS Reduces its Peak Surcharge for Shipments from China

The worldwide COVID-19 pandemic continues to evolve and changing patterns have resulted in a UPS peak surcharge reduction on shipments from China to several countries.  A few months ago, we posted an initial update about temporary peak surcharges from all of the major shipping firms, including FedEx, DHL, and UPS. Because shipping as a whole is experiencing a surge thanks to the pandemic (and because the process of shipping has become more complicated thanks to the pandemic), carriers have added these surcharges to maintain operations.

We expected these surcharges could change over time, and a surcharge reduction is what we’re currently seeing from UPS. In today’s blog post, we’ll dive into what this peak surcharge reduction looks like, as well as the ramifications it could have for your business.

UPS Peak Surcharge Reduction: China Mainland to U.S. Shipments

As of June 28, 2020, UPS reduced the peak surcharge rate on shipments originating in China Mainland and arriving in the U.S. Surcharges apply to the same categories of service now as they did previously:

  • UPS Worldwide Express Plus
  • UPS Worldwide Express
  • UPS Worldwide Saver
  • UPS Worldwide Expedited
  • UPS Worldwide Express Freight
  • UPS Worldwide Express Freight Midday

As before, the peak surcharge rates vary by service level and are assigned as a rate in U.S. dollars per pound of billable weight.  The only change at this present time is the rate per pound.

  • UPS Worldwide Express Plus — lowered from $0.79 per pound to $0.57 per pound
  • UPS Worldwide Express — lowered from $0.79 per pound to $0.57 per pound
  • UPS Worldwide Saver — lowered from $0.79 per pound to $0.57 per pound
  • UPS Worldwide Expedited — lowered from $0.75 per pound to $0.52 per pound
  • UPS Worldwide Express Freight — lowered from $1.81 per pound to $1.36 per pound
  • UPS Worldwide Express Freight Midday — lowered from $1.81 per pound to $1.36 per pound

As a point of clarification, these surcharges and surcharge reductions apply to shipments that originate in Mainland China but are paid for in the U.S. Shipments paid for in other countries (regardless of origin or destination) may be subject to surcharges as priced in the country where payment occurs.

ebook logistyx quadrant Choosing a TMS for Parcel ShippingAs of June 28, 2020, all other temporary peak surcharges already in effect remain unchanged from previous updates. This includes the peak surcharge on shipments from Hong Kong SAR to the U.S., where the May 24 rates match the newly revised rates for China Mainland exactly.

All other international shipments remain under the surcharge set on April 12: $0.34 per pound on UPS Worldwide Express Freight and UPS Worldwide Express Freight Midday, and $0.11 per pound on all other service levels.

You can find even more details about these changes in this UPS Peak Surcharge Reduction fact sheet.

UPS Peak Surcharge Reduction: China Mainland to Canada Shipments

As it did with China Mainland to U.S. shipments, UPS announced a peak surcharge reduction on China Mainland to Canada shipments, also effective June 28, 2020, until further notice. The UPS peak surcharge reduction for Canada covers the same categories and follows the same model. It’s a surcharge per pound (or kilogram) levied on all relevant shipments paid for in Canada.

Here’s how the peak surcharge reduction breaks down for China Mainland to Canada shipments. Measured in U.S. dollars and pounds, the reductions match exactly:

  • UPS Worldwide Express Plus — lowered from $0.79 per pound to $0.57 per pound
  • UPS Worldwide Express — lowered from $0.79 per pound to $0.57 per pound
  • UPS Worldwide Saver — lowered from $0.79 per pound to $0.57 per pound
  • UPS Worldwide Expedited — lowered from $0.75 per pound to $0.52 per pound
  • UPS Worldwide Express Freight — lowered from $1.81 per pound to $1.36 per pound
  • UPS Worldwide Express Freight Midday — lowered from $1.81 per pound to $1.36 per pound

The Canadian dollar equivalents are as follows:

  • Express Plus, Express, Saver — CAD $1.05 per pound to CAD $0.76 per pound
  • Expedited — CAD $1.00 per pound to CAD $0.69 per pound
  • Express Freight, Express Freight Midday — CAD $2.41 per pound to CAD $1.81 per pound.

If you prefer to see rates displayed by kilogram, UPS has provided those in a chart here.

Once again mirroring the temporary peak surcharges in the U.S., UPS has set surcharge rates from Hong Kong SAR to Canada and for all other international shipments at the same rates as in the U.S. These remain unchanged since the previous update.

What the UPS Peak Surcharge Reduction Means for Your Business

The UPS peak surcharge reduction on shipments from China Mainland to the U.S. and Canada will have ramifications for your business if you ship in this direction. First, you’ll continue to incur greater shipping costs with UPS than you did a year ago, and depending on your shipping volume and margin, this cost could have a significant effect on your bottom line. However, the reduction narrows the gap considerably and should come as welcome relief.

Another aspect to consider is that the major carriers are not making changes in lockstep. Now that UPS has announced a reduction of this magnitude, a business that’s savvy and agile will evaluate its shipping needs. Consider whether, at this lower surcharge, working with UPS will save you money compared to working with another service.

Of course, we understand that not every business can consider switching parcel carriers at the drop of a hat. But if you’re in a position to reevaluate, now is a good time to do so.

Wrapping Up

Between COVID-19 and the economic fallout it’s causing, this is an unusual point in modern history to have to navigate international shipping. It seems like there are hurdles at every turn. You need a trusted, established logistics partner to help you navigate these complexities, and Logistyx Technologies is here for you.  Our multi-carrier shipping software enables you to meet your customers’ shipping requirements from within a single system.  It automatically determines the carrier in your transportation network that can provide the best rates to a particular region, accounting for surcharges and according to your business rules, ensuring every shipment is in compliance with each carrier’s labeling and communication standards, as well as with any applicable trade regulations.

Ready to learn more about how we can help? Get in touch today.