To say the ongoing COVID-19 pandemic has been a challenge is, at this point, likely a bit of an understatement. But one of the industries hit the hardest is also the one on which most people are now incredibly reliant: parcel shipping.
In early March, at the onset of the pandemic, FedEx actually suspended its 2020 profit outlook, citing the “significant impact” of the Coronavirus moving forward. As was true with so many carriers during this time, FedEx looked to cut costs in any way they could to remain profitable while shipping a record number of parcels, and they levied their fair share of surcharges as one way to boost the bottom line.
Unfortunately for carriers, these record shipping volumes show no signs of slowing. The shipping landscape has yet to return to “normal” at this point, and industry experts predict it may not ever. And with a record number of consumers now conditioned to – and comfortable with – e-commerce, all signs indicate this extraordinary year could very well be punctuated by an extraordinary peak season. As a result, many carriers are planning ahead, and turning once again to surcharges as a way to protect their profits. In fact, organizations like UPS, FedEx, and even the USPS have already announced they are adding a variety of holiday carrier surcharges to their prices.
Holiday Parcel Surcharges: Breaking Things Down
The United States Postal Service has made major headlines in the last few weeks, to the point where it can be easy to forget they were actually the first to announce proposed (and unprecedented) holiday surcharges. In anticipation of a massive holiday-driven demand for e-commerce parcel shipping, the proposed surcharges will go into effect from October 18, 2020 to December 27, 2020, and add anywhere from $0.24 to $1.50 more per package shipped, no exceptions.
It’s important to note this is a step the USPS has not actually taken before – in the past, it was limited mainly to carriers like UPS and FedEx. However, the new Postmaster General, Louis DeJoy, said this was a direct result of higher-than-expected demand and would directly impact shippers sending more than 25,000 packages per week during the holiday season. And while it’s absolutely true the USPS’s holiday surcharges are higher than expected, they’re not nearly as high as what FedEx and UPS are planning…
Also bracing for a historic peak holiday shipping season, UPS has announced they will be adding surcharges ranging from $1.00 to $3.00 per package, depending on the carrier service. This will begin with the onset of peak season on October 4 and will affect all customers shipping more than 25,000 packages per week.
Under these new rules, any customer with peak volumes exceeding more than 110% of their average weekly volume dating back to February of 2020 will pay $1.00 per package extra on all ground residential deliveries. If using residential air delivery, this number will increase to $2.00 per package in addition to what they were already paying. Likewise, an additional $1.00 will be added to the cost of SurePost – which is where UPS hands packages to the USPS for last-mile residential deliveries.
As was true in the case of the USPS, a spokesman for UPS said these surcharges were designed to “balance the company’s capacity needs and costs with projections for holiday demand.”
Note, UPS has also indicated there will be a new $5.00 surcharge on all packages requiring “unusual and labor-intensive processing.” Large packages typically requiring special handling are those with a length exceeding 96 inches, or a combined length and girth exceeding 130 inches. Shipments exceeding UPS’s own “maximum limits” will pay an additional $250 surcharge. All UPS surcharges will run until January 16, 2020.
Finally, FedEx indicated it will also implement similar surcharges in an effort to “continue providing our customers with the best possible service during this challenging time.” Their surcharges go into effect from November 2, 2020 to January 17, 2021, and customers must once again reach a certain volume threshold to be impacted.
FedEx’s holiday carrier surcharges are actually a bit more forgiving than the others, only impacting customers who ship more than 35,000 packages on average per week in October and November. The total charge will vary depending on how much the shipper shipped during this period compared to how much they were shipping from February 3 to March 1, 2020 – prior to the onset of the pandemic.
According to FedEx’s own website, residential shipments could see a surcharge added to each package ranging from between $1.00 and $5.00 depending on the circumstances. FedEx SmartPost – which is where FedEx hands shipments to the United States Postal Service for last-mile delivery – will see an increase similar to UPS’s of an additional $1.00 per package from November 2 to November 29. At this point, the surcharge actually increases to $2.00 per package until December 6, before decreasing back to $1.00 until January 17, 2021.
Respond Now to Carrier Surcharges
If your current shipping capabilities don’t provide opportunities to optimize parcel shipping such as parcel consolidation and carrier invoice auditing, you’re likely missing potential savings and impeding your business’s ability to quickly react to carrier surcharges. To learn more about the latest parcel shipping tools and technology, contact us today.