Recent weeks have not been forgiving for shippers. There was once hope that post-holiday shipping would return to somewhat normal expectations. That's now long dead. In December, UPS announced it would reinstate pre-holiday peak surcharges, effective January 17, 2021, in the form of a residential delivery surcharge. In turn, the need for logistics optimization has never been higher, and these charges represent a need to boost throughput and profitability among carriers. According to Emma Cosgrove of Supply Chain Dive, the surcharge on Ground Residential and SurePost packages apply to any shipper that:
"shipped more than 25,000 packages in any single week since February. In May, the surcharges applied to any shipper moving 25,000 packages more than its average volume in February."
The UPS change in charges amounts to:
And now, FedEx is following in kind. "FedEx announced a $0.30 per package surcharge on U.S. residential delivery traffic tendered to large customers, effective Feb. 15.," reported American Shipper. "Large customers" are defined by FedEx, according to their website, as those who ship "on average, more than 30,000 packages per week from Jan. 4 to Jan. 31. It is worth noting that the official FedEx website did not call this a surcharge beyond being listed under the Peak Surcharges page. The charge is $3 per package for additional handling, a $0.75 surcharge for SmartPost® package services and a $30 peak oversize charge. FedEx further noted that the charge is indefinite.
The implication is simple.
There are many ways for enterprises to gain control of load execution and profitability. And one of the most effective ways is to avoid unexpected surprises in shipping costs. With the ghosts of 2020 continuing to haunt the chain, now is the time for companies to act. And by increasing their use of freight auditing and advanced analytics, it is possible to better manage freight spend and recapture costs as residential delivery surcharge becomes the new, immortal component in logistics. And remember that while limited to FedEx and UPS right now, the other shoe will fall. Request a consultation with Intelligent Audit to get started in your strategic positioning to avoid surcharge-delirium in your supply chain.
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The parcel peak season of 2021 is sure to set records, and the recent strength behind Amazon Prime Day 2021 shows a bit of what to expect.