All carriers are already implementing new peak season surcharges. And with several months remaining until the official beginning of peak — it could be as soon as Halloween if Amazon pulls another early launch of Black Friday — understanding these surcharges is essential to keeping shipping spend in check. But there's plenty of confusion surrounding this issue as the charges evolve over time. Let's dig into a comparison of the two and how it all amounts to needing a better solution to track your supply chain financial data and cost.
UPS is charging an additional handling surcharge of $3.60 per package until October 2, 2021, and that surcharge is set to increase to $6.00 per package from October 3, 2021 through January 15, 2022. Meanwhile, FedEx has implemented a $5.95 surcharge for packages sent between October 4, 2021, and January 16, 2022. That's an increase from the $3.00 handling surcharge active through October 3, 2021.
It's important to note that large package surcharges are different from packages that are clearly beyond limits. In other words, these items may be larger but do not yet reach the threshold of needing LTL transport.
When a shipment is routed by parcel rather than the LTL network at either UPS or FedEx, both carriers have announced additional charges. FedEx calls these charges "Unauthorized Packages," and UPS calls them "Over Maximum Limits."
However, the difference between costs for both is stark for the upcoming peak season.
It's also worth noting that, as of this writing, the peak season surcharges of UPS versus FedEx have both left room for additional increases.
Both carriers also have existing surcharges to customers based on different peaking factors — measuring the volume shipped against dates based onFebruary 2020 volumes.
UPS Peak Factor Surcharges
Effective October 31, 2021 to January 15, 2022 Service Level 110% - 200% of February 2020 Volume 200%-300% of February 2020 Volume 300%-400% of February 2020 Volume 400%-500% of February 2020 Volume >500%
of February 2020 Volume UPS SurePost (cost per package) $1.15 $2.15 $3.15 $4.15 $5.15 UPS Ground Residential (cost per package) $1.15 $2.15 $3.15 $4.15 $5.15 UPS Next Day Air Residential (cost per package) $2.15 $3.15 $4.15 $5.15 $6.15 All Other UPS Air Residential (cost per package) $2.15 $3.15 $4.15 $5.15 $6.15
Now let's consider the FedEx Peak Factor Surcharges that come with a detailed explanation of what time periods are considered, including both pre-pandemic and current volumes:
"For customers who ship more than 25,000 weekly average residential and FedEx Ground Economy packages (total for FedEx Express and FedEx Ground U.S. domestic) from Oct. 4, 2021-Oct. 17, 2021, the Peak Residential Delivery Charge reflected in the chart below will apply Nov. 1, 2021-Dec. 12, 2021. The amount charged per package will be based on a Peaking Factor, calculated as weekly average residential and FedEx Ground Economy packages shipped Oct. 4, 2021-Oct. 17, 2021, divided by weekly average residential and FedEx Ground Economy packages shipped Feb. 3, 2020-March 1, 2020, multiplied by 100. Peaking Factor and amount charged are determined separately for FedEx Express and FedEx Ground.
For customers who ship more than 25,000 weekly average residential and FedEx Ground Economy packages (total for FedEx Express and FedEx Ground U.S. domestic) from Nov. 15, 2021-Nov. 28, 2021, the Peak Residential Delivery Charge reflected in the chart below will apply Dec. 13, 2021-Jan. 16, 2022. The amount charged per package will be based on a Peaking Factor, calculated as weekly average residential and FedEx Ground Economy packages shipped Nov. 15, 2021-Nov. 28, 2021, divided by weekly average residential and FedEx Ground Economy packages shipped Feb. 3, 2020-March 1, 2020, multiplied by 100. Peaking Factor and amount charged are determined separately for FedEx Express and FedEx Ground."
With that in mind, here are the breakdowns for the "Peaking Factor" surcharges at FedEx and by service level.
FedEx Peaking Factors and Costs
Effective November 1, 2021 to December 12, 2021. Service Level >110% to 200% >200% to 350% >350% to 500% >500% Charge per U.S. Domestic FedEx Ground® Residential Package $1.15 $2.25 $3.50 $5.00 Charge per U.S. Domestic FedEx Express® Residential Package $2.15 $3.25 $4.50 $6.00
From China Mainland and Hong Kong.
UPS announced in June that it would assess peak season surcharges on these shipments, ranging from $1.13 to $1.93 per pound.
It's clear that the surcharges for the 2021 peak season are confusing and detailed. There's more opportunity for error during the holiday shipping season, and with the continuous increase in e-commerce, it will be interesting to see if either major parcel carrier assesses additional surcharges. Regardless, the peak surcharges emphasize the need to capture, cleanse, analyze and apply data to understand your true shipping costs. In turn, those actionable insights will help your team identify other areas of savings to leverage while navigating the higher costs of peak season and the months to follow.
The best way to overcome these costs is with a single source of truth that can bring together the data on costs, shipping levels, location, and granularity of other views. At the same time, that data may look vastly different and need to consider the difference in service level terminology, making data normalization essential for shippers to apply. This is exactly how Intelligent Audit operates, unifying the data streams, making sense of the differences automatically, addressing problems, finding ways to optimize shipping and reduce reliance on a single mode like parcel, and more. Stop worrying over peak season surcharges, and let the advanced insights of Intelligent Audit and our team become an extension of your supply chain strategy. Connect with Intelligent Audit to get started.
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.
Following more surcharge announcements over recent weeks, ranging from GRIs and new peak surcharges, UPS has now announced 2022 GRIs