UPS rolls out Peak Season surcharges

Atlanta-based global freight transportation and logistics services provider UPS said earlier this week that it has rolled out updated 2021 Peak Surcharges.

“UPS continues to provide essential service amid the ongoing coronavirus outbreak to support the needs of our customers,” UPS said in a statement. “Our goal is to ensure businesses and customers are able to meet their shipping needs while demand has increased for shipping services.”

The company added that peak surcharges are subject to change, adding that peak periods may be extended or otherwise changed, telling shippers to continue to refer to ups.com/peaksurcharge for updates prior to tendering shipments.

A full listing of the new UPS Peak Season surcharges can be found here. Perhaps the most notable of them all, though, is a peak surcharge applying to packages requiring additional handling, a somewhat common occurrence since the outset of the pandemic, and large packages for all U.S. import, and U.S. export shipments, for qualifying customers who have shipped more than 1,000 total packages or more than 10 packages that require additional handling or large packages for any week following February 2020.

And it added that a peak surcharge will apply to all packages that are over maximum limits for all U.S. domestic, U.S. import, and U.S. export shipments.

From July 4 through October 2, UPS will implement the following:

• an additional handling peak surcharge of $3.50 per package, up from $3.00 per package, which will then increase to $6.00 per package from October 3 to January 15, 2022;
• a $40 large package surcharge, up from $31.45 per package, which will then increase to $60.00 per package from October 3 to January 15, 2022; and
• a $250.00 per package for Over Maximum Limits packages, from October 3 to January 15, 2022

Jerry Hempstead, president of Hempstead Consulting, said these rate increases create a difficult situation for shippers, adding that UPS is faced with the challenge of producing more cash than they did in the second half of last year.

“The surcharges are now here to stay,” he explained. “It’s like a drug addiction. And the more they raise the surcharges the more they will crave next year. This announcement is Christmas in July. It’s getting harder and harder for shippers to take cost out, because both UPS and FedEx are going to be full in the fourth quarter, mirroring last year. FedEx ground still has not recovered its service levels back to pre-covid performance. So, shippers can expect higher costs and worse service, and the USPS isn’t going to be able to offer much relief. They just asked the PRC to change the service standards for First Class parcels (think under 1-pound shipments like your prescription meds).” 

Krish Iyer, Head of Industry Relations and Strategic Partnerships, for ShipStation, said that these fees and surcharges have long served as a way that carriers can get the type of premium packages that have long been desirable.

“A small surcharge on a more densely packed, heavier package traveling a longer distance is less impactful than on a lower-weight package,” he explained. “Additionally, surcharges have often served as a form of 'self-correction' for taking on packages that are harder to handle operationally (i.e. additional handling and large package surcharges). Although heavier in weight, a standing desk in a heavy box, for example, is simply harder to handle than a large box of books; these fees then serve as a form of 'self-correction' here. One thing to note is that technology platforms such as ShipStation, Stamps.com, ShippingEasy and ShipWorks do have much lower UPS rates inside their applications that reduce or completely eliminate many of these surcharges.”

Matt Bohn, Senior Consultant, Professional Services, for San Diego-based Shipware, said that, given how capacity and Peak Season “play together,” a good approach for shippers to take, in order to mitigate these rate increase is to diversify their carrier sourcing.

“Using both nationals and regional players, as well as the USPS, can lead to both lower peak fees and provide some additional assurances that packages will be picked up,” he said. “Other options would be packaging optimization to help avoid the fees, but that can be impossible for some shippers.”