UPS Announces Peak Surcharges Impacting High-Volume Shippers
UPS announced last week its surcharges for the 2022 peak season, which will impact high-volume shippers expecting elevated home delivery demand during the holidays, reports Supply Chain Dive. Beginning Oct. 30, customers billed for more than 20,000 packages any week after October 2021 will see a “Peak/Demand Surcharge” applied to certain UPS Air Residential, Ground Residential and SurePost shipments, according to the carrier. The fee will be active until Jan. 14, 2023. The surcharge is applied on a weekly basis to all packages over 105 percent of the baseline volume for each service.
UPS is also raising its per-package surcharges for additional handling (from $3.50 to $6.50), large packages ($40 to $70), and packages in excess of its maximum shipping limits (no charge to $400) on qualifying customers. The new prices for these surcharges are active from Oct. 2 until Jan. 14, 2023. The full announcement on peak demand surcharge increases from UPS can be found here.
Total Retail's Take: Once again, the upcoming arrival of the holiday season signals new and increased fees from delivery carriers. Retailers have come to expect these hefty surcharges each winter during peak holiday shopping season, but that doesn't mean they don't put a strain on their businesses. To adjust, retailers will need to decide if they can absorb all or part of the cost increase, or pass the additional shipping costs onto customers. Remaining transparent about elevated shipping fees is essential to ensure shoppers don't abandon carts at checkout.
UPS’ surcharge reveal follows fellow parcel delivery giants FedEx and the Postal Service, which both announced cost hikes of their own. Amazon.com is for the first time rolling out a peak season fee on its fulfillment services for third-party sellers. Shipping carriers cite increased package volume, cost to transport packages, and labor challenges as reasons for implementing peak season surcharges as they face pressures from both businesses and consumers. Hopefully, retailers and carriers alike already have plans and strategies in place to face the challenges brought by the upcoming holiday season. If not, it would be wise to start planning now.
Kristina Stidham is the digital content director at Total Retail and sister brands Women in Retail Leadership Circle and Women Leading Travel & Hospitality at NAPCO Media. She is passionate about digital media and handles video, podcast and virtual event production for all brands. You can often find her at WIRLC, TR, WLT&H or industry events with her camera and podcasting equipment—or at home on Zoom—recording interviews with thought leaders and business executives.
Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia. Go Owls! When she's not in the office, she loves to go on long walks, sing around the house, hangout with her family and two pet guinea pigs, and travel to new places.