UPS Announces Unprecedented Holiday Surcharge Changes

UPS Announces Unprecedented Holiday Surcharge Changes

UPS Teamsters

As of August 7th, UPS announced changes to its peak domestic surcharges for the upcoming holiday season that is unprecedented.

In particular, the company will be implementing its surcharges based on volume as compared to the average from February 2020. These surcharges will have huge implications for large shippers this holiday season.

While the standard fees are similar to previous years, as seen here:

2020

Service Peak Surcharge
Large Package Surcharge $50.00
Over Maximum Limit $250.00
Additional Handling Charge $5.00

2019

Service Peak Surcharge
Large Package Surcharge $31.45
Over Maximum Limit $250.00
Additional Handling Charge $3.60

However, the biggest change is the additional surcharges that will be levied based on volume. Along with the standard peak surcharges, UPS is adding per package charges based on the percent over average weekly volume as compared with February 2020.

With these in place, large shippers will see significant cost increases beginning in November 2020:

Peak Period: November 15, 2020 to January 16, 2021

Service Level 110%-200% of Feb Volume >200%-300% >300%
SurePost $1.00 per package $2.00 per package $3.00 per package
Ground Residential $1.00 per package $2.00 per package $3.00 per package
Next Day Air Residential $2.00 per package $3.00 per package $4.00 per package
All Other Air Residential $2.00 per package $3.00 per package $4.00 per package

The implication of this change is that UPS assumes that the challenges faced by carriers due to COVID-19 will persist through the new year and, perhaps, beyond. We can assume that in-person shopping will be almost entirely replaced by eCommerce purchasing this year, a compounding of the trend we were already seeing.

In fact, it’s been reported that COVID-19 accelerated eCommerce’s growth by “4-6 years.”

For the full breakdown of peak surcharges, including for international shipments, see UPS’ most recent update.

How to Mitigate

The COVID-19 pandemic has had a huge impact on shipping – it has caused shippers to fully reassess their supply chain strategy and their carrier mix. As we go into the holiday season, it is more important than ever before to have full visibility with powerful analytical tools and algorithms.

For domestic shipping this holiday season, it will be important to shippers to look beyond the national carriers and give greater consideration to regional carriers. In order to do this, they will need to be able to perform deep analyses, taking into account regional networks’ locations, linehaul costs to manage the hub injections, time in transit and costs in order to identify the most ideal opportunity for leveraging regional carriers based on actual data.

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