Thus far, 2021 is on track to provide little relief for shippers stressed over the past year’s peak surcharges. All major parcel carriers have announced or have implemented processes to increase general rate surcharges over the past year. Recently, DHL announced a limit on average parcel weight of roughly 66 pounds. FedEx peak surcharges increased in late May 2021 across several service levels. And USPS has requested an increase in letter postage rates, as well as flats. Now, UPS has followed the trend as well, with new surcharges set to take effect on June 13 for shipments originating from Japan. This is in addition to those implemented on China Mainland-originating shipments in mid-May. And shippers need to know a few things about these new surcharges and their impact on transportation spend.
What Are the New UPS Peak Surcharges
Unlike the recent surcharges announced by FedEx, these new surcharges are limited to shipments originating from Japan. Specifically, the changes are as follows:
- $0.34 per pound for packages sent via UPS Worldwide Express, UPS Worldwide Express®, UPS Worldwide Saver®, and UPS Worldwide Expedited®
- $0.57 per pound for packages sent via UPS Worldwide Express Freight® and UPS Worldwide Express Freight ® Midday
Other Charges and Pricing Going into Effect from Canada Post
Canada Post has also announced general rate increases for domestic, USA and international shipments, effective September 13:
- 3.5% – the weighted average price increase for domestic parcels
- 2.8% – the weighted average price increase for U.S. and international parcels
- For additional details, please consult the Parcel Services Customer Guide
Canada Post also announced that, effective November 1, the surcharge for Oversize or Unpackaged items will increase to $25 (from $18) and the surcharge for Out-of-Spec items will increase to $400 (from $300). These rate increases will be in effect until January 16, 2022, and will cover the extra handling required for bigger, bulkier parcels during the peak holiday season.
Why the New Surcharges Will Impact US Imports and How
It isn’t surprising that UPS made this decision, especially with ocean freight starting to cause major issues at the Yantian port, which was already subject to the peak surcharges announced in mid-May. But as of June 7, 2021, increased controls to manage the spread of yet another COVID-19 outbreak have led to vessel delays of 14+ days, reports Seatrade Maritime News. But as the congestion grows, it would not be surprising to experience delays exceeding two weeks. In some cases, ocean carriers have listed 29 vessels omitting calls in Shekou and Yantian.
That may seem unrelated to UPS, but it is important to realize one central fact.
When ocean freight volumes hit this level of congestion, it inevitably carries over in the form of increased air freight. And in terms of freight heading toward the U.S., air freight rates are likely to increase. This surcharge helps to curb the residual effect that Yantian port congestion has on Japanese transportation and the net effect that will be felt for exports that pass through Japan on the way to the U.S. And it remains to be seen whether the continued worsening congestion in the region will lead to additional surcharges by DHL and FedEx beyond those already implemented.
What Should Shippers Do About New UPS Peak Surcharges
The reality is that uncertainty continues to affect the market. Shippers need to stay apprised of the situation and ensure their freight billed is accurate and rated accordingly. That means tracking total volumes shipped, validating whether volumes are above the threshold set for these pre-peak surcharges—currently set at 25,000 during any week following February 2020 for UPS—and ensuring all carriers remain in compliance with contractual obligations.
With that in mind, it’s also important for shippers to have a single source of truth for all freight data and analytics that can show the reality of their costs, operations, and expectations for the remainder of the year.
Choose Intelligent Audit to Keep Your Books in Line as Surcharges Continue Across Carriers
The one outcome that also needs to be discussed is that this will not be the last surcharge for peak season 2021. In fact, the coming months are indicative of increased ocean and air freight coming from China due to the back-to-school season and the approaching holidays. Volumes are going to keep rising, and rates are going to respond in kind. Regardless, shippers that choose a quality provider of analytics in all transportation funds under management (FUM) like Intelligent Audit will be best equipped to overcome the adverse impacts of such surcharges. Request a consultation with Intelligent Audit to learn more today.