Much of what has happened in the shipping world in the last 6 months could be called “unprecedented.” From monumental pricing changes to carrier capacity issues impacting shippers, the world of shipping has been turned on its head and shippers are still trying to catch up.
In Mid-August, another unprecedented announcement happened – USPS announced that, for the first time, it would be implementing a holiday surcharge.
The USPS announcement came as controversy over the new Postmaster General, Louis DeJoy, began to heat up. In addition, as the election season has begun, there has been much concern as to USPS’s ability to handle mail-in voting.
USPS Holiday Surcharge
|Parcel Select Destination
Delivery Unit (DDU)
|Starts at $3.19||24 cents|
|Parcel Return Service||Starts at $3.05||24 cents|
|Parcel Select Lightweight||Starts at $1.81||24 cents|
|FCPS Commercial||Starts at $2.74||25 cents|
|Priority Mail Commercial||Starts at $7.02||40 cents|
|Parcel Select Ground||Starts at $6.92||40 cents|
|Parcel Select DSCF||Starts at $4.37||40 cents|
|Parcel Select DNDC||Starts at $5.98||40 cents|
|Priority Mail Express Commercial||Starts at $22.75||$1.50|
Given that USPS acts as a last-mile carrier for other carriers, these prices were likely to be passed along to others.
It now seems that UPS is making the necessary adjustments to absorb the additional cost.
UPS Pricing Increases
While all the carriers have been steadily announcing increased pricing, UPS has stood out.
The reason is that a recent surcharge announcement prior to this adjustment will be applied in addition to existing surcharges based on the percentage increase over the average volume a shipper exceeded.
This is particularly burdensome for large shippers whose prices this holiday season will likely be exorbitant.
|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|
In addition to what has already been announced, this week UPS stated that beginning October 18th, 2020 they will be increasing their UPS SurePost rates $0.24 per package.
The increase mirrors that of USPS and will go into effect around 1 month prior to their UPS’s Peak Surcharges.
The announcements of surcharges and pricing increases have become the “new normal” during the pandemic. And it doesn’t look like there will be a light at the end of the tunnel anytime soon.
It’s incumbent on shippers now to really invest in the tools needed to mitigate these cost increases and the uncertainties that have arisen due to COVID-19.
Visibility over supply chains via powerful analytics remains the best opportunity for shippers to gain network efficiencies, enabling delivery of shipments to be faster, at a lower cost with fewer exceptions.
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