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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.