Expectations for the 2022 peak shipping season are on track to break records again, but there is a greater sense of uncertainty as the economy evolves. The industry is no stranger to disruption, and last year's peak season felt the downstream effects of container congestion. The scenario is occurring again, albeit in earlier stages, and there is a fear that spending could taper as the months move forward. However, the battle is still the same for shippers; they must find affordable transportation, watch their costs, and know what to expect. In addition, now is the traditional start of the holiday peak planning, and as anticipated, FedEx has released its first update to peak holiday shipping surcharges.
In the interim, UPS has released a new update to its peak demand surcharges but has yet to release a full holiday surcharge breakdown. For now, the interim updates are as follows:
China Mainland, Hong Kong SAR, or Macau SAR to the U.S.
UPS Worldwide Express Plus®, UPS Worldwide Express®, UPS Worldwide Saver®, UPS Worldwide Expedited®
Shipments From Australia, New Zealand, Vietnam, Japan, Korea, Malaysia, Thailand, Indonesia, Singapore, Philippines, or Taiwan to the U.S
Unfortunately, any change to surcharges amounts to a greater risk of billing discrepancies, and the trick is to know what surcharges are active and when they apply. Here are the upcoming peak season surcharges for FedEx for the 2022 holiday season.
As demand fluctuates, peak season surcharges will help the company enable continued fulfillment throughout the holidays. Yes, there is an argument that the market is slowly stabilizing to pre-pandemic levels, but that could change very quickly. The surcharges for the 2022 peak season are also less drastic than those seen in 2020 and 2021, but they're still higher than an all-out, pre-pandemic assessment.
These charges also help offset the continued effects of inflation, and surcharges range from $1.50 per package up to unauthorized charges of $385.00 per package. Here is the full breakdown.
Surcharge Services Impacted Amount Effective Dates Peak Additional Handling Surcharge U.S. Express Package Services, U.S. Ground Services, International Ground Service $3.45 per package
$6.55 per package Sept. 5, 2022–Oct. 2, 2022
Oct. 3, 2022–Jan. 15, 2023 Peak Oversize Charge U.S. Express Package Services, U.S. Ground Services, International Ground Service $62.50 per package
$68.75 per package Sept. 5, 2022–Oct. 2, 2022
Oct. 3, 2022–Jan. 15, 2023 Peak Ground Unauthorized Package Charge U.S. Ground Services, International Ground Service $385.00 per package
Oct. 3, 2022–Jan. 15, 2023 Peak Surcharge FedEx Ground® Economy Package Services2 $1.50 per package
$2.50 per package
$1.50 per package Oct. 31, 2022–Nov. 27, 2022
Nov. 28, 2022–Dec. 11, 2022
Dec. 12, 2022–Jan. 15, 2023 Peak Residential Delivery Charge FedEx Express and FedEx Ground U.S. domestic residential packages (excluding FedEx Ground Economy and FedEx One Rate packages). Additional Peak Residential Surcharges Based on Unique Calculation Weeks Oct. 31, 2022–Jan. 15, 2023
As with everything in logistics, it is a dance of supply and demand. Surcharges are the result of greater forecasted demand, and even still, carriers have the option to add additional surcharges and adjust the above schedule of surcharges accordingly. Furthermore, FedEx still has updated the Residential Delivery Surcharges based on a rolling weekly calendar to assess volumes between 105% and above 400% of each of the following:
Peaking Period Calculation Week Application Week 1 Oct. 10, 2022 Oct. 16, 2022 Oct. 31, 2022 Nov. 6, 2022 2 Oct. 17, 2022 Oct. 23, 2022 Nov. 7, 2022 Nov. 13, 2022 3 Oct. 24, 2022 Oct. 30, 2022 Nov. 14, 2022 Nov. 20, 2022 4 Oct. 31, 2022 Nov. 6, 2022 Nov. 21, 2022 Nov. 27, 2022 5 Nov. 7, 2022 Nov. 13, 2022 Nov. 28, 2022 Dec. 4, 2022 6 Nov. 14, 2022 Nov. 20, 2022 Dec. 5, 2022 Dec. 11, 2022 7 Nov. 21, 2022 Nov. 27, 2022 Dec. 12, 2022 Dec. 18, 2022 8 Nov. 28, 2022 Dec. 4, 2022 Dec. 19, 2022 Dec. 25, 2022 9 Dec. 5, 2022 Dec. 11, 2022 Dec. 26, 2022 Jan. 1, 2023 10 Dec. 12, 2022 Dec. 18, 2022 Jan. 2, 2023 Jan. 8, 2023 11 Dec. 19, 2022 Dec. 25, 2022 Jan. 9, 2023 Jan. 15, 2023
The exact surcharge calculation is also based on volume, as shown below:
105%–125% >125%–150% >150%–200% >200%–300% >300%–400% >400% FedEx Ground® $1.25 $1.75 $2.00 $2.50 $4.25 $6.00 FedEx Express® $2.25 $2.75 $3.00 $3.50 $5.25 $7.00
These surcharges can and will impact the cost of transportation. While they may not necessarily be as high as some of the surcharges seen in 2021, the difference is almost insignificant. Further, there is more complexity in the surcharges as they're now based on changing demand and unique calculation periods.
For example, let's assume that residential deliveries are 321.5% higher for the week ending Nov. 27, 2022. Those residential deliveries will have a surcharge based on the shipping volume from Oct. 31, 2022, to Nov. 6, 2022 period. Yet, the volume for the week ending on Nov. 6, 2022, was only 104% of the usual demand. In this case, no surcharge applies. However, deliveries made between Dec. 12, 2022, and Dec. 18, 2022 will have a surcharge of $4.25–$5.25 per package. And as the volume changes weekly, shippers will need to know precisely how much larger their shipping volume is.
Failure to track that volume week by week and apply it accordingly could mean the difference between planning to spend an extra $5,250 to send 1000 packages and offering a last-minute promotion to customers for the holidays.
It's a precarious situation, and the only way forward is to leverage a single source of truth to track total volumes across all possible granularities, including carriers, and know when those surcharges may apply.
Furthermore, it's also possible that FedEx could incorrectly assess surcharges based on an incorrect week, resulting in massive inaccuracies in total charges. However, peak season demands may leave many shippers simply paying and moving on to the next order.
Despite the confusion, intuitive systems and deep learning models can recognize these potential inaccuracies and send chargebacks to the carriers to ensure shippers only pay for rendered services under their respective application periods.
Connect with Intelligent Audit to ensure your invoices and billing details reflect the surcharges and better understand how your transportation spend evolves in the run-up to peak.
Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.
In a high-stakes logistics industry, supply chain professionals must adapt to turbulent times. Here's what is making news that may impact your business.
With negotiations going smoothly at UPS, will the same be true for ABF? Catch up on the news and trends shaping the transportation & logistics industries.