The 2021 holiday season is set to be the biggest of all time, with $206.88 billion forecasted in e-commerce sales alone. With an uptick in sales comes an increase in packages routed through major shipping companies – in fact, package delivery demand is projected to exceed capacity by about 5 million pieces per day this holiday season.
With more parcels than ever criss-crossing the country, carriers are implementing peak season surcharges and price increases to help them keep pace with demand and the additional handling costs that come with it. Structurally, carriers see seasonal surcharges as the new normal, and brands should expect and prepare for the added expense.
The best way to navigate holiday shipping costs and surcharges is to understand the surcharges and policies for each carrier so you’re not surprised at the end of the season. Smart brands will plan ahead to optimize shipments, and forecast for charges into Q1, as surcharges can trail seasonal billing.
While holiday surcharges have been common among large commercial carriers like UPS and FedEx for years, the USPS is implementing surcharges for the first time due to the surge in e-commerce shopping.
The USPS will add surcharges to packages shipped between Oct. 3 and Dec. 26 to help offset higher shipping costs. The extra charges will apply to both individuals and corporations, and shippers can expect to pay an additional 25¢ to $5 per package, depending on the size of the parcel and the distance it needs to travel.
USPS surcharges that will apply to Priority Mail, Priority Mail Express, Parcel Select Ground and USPS Retail Ground are as follows:
- $0.75 increase for PM and PME Flat Rate Boxes and Envelopes
- $0.25 increase for Zones 1-4, 0-10 lbs
- $0.75 increase for Zones 5-9, 0-10 lbs
- $1.50 increase for Zones 1-4, 11-20 lbs
- $3.00 increase for Zones 5-9, 11-20lbs
- $2.50 increase for Zones 1-4, 21-70 lbs
- $5.00 increase for Zones 5-9, 21-70 lbs
A full list of commercial and retail pricing and surcharges can be found on the Postal Service’s Postal Explorer website.
UPS peak season surcharges are targeted toward high-volume shippers and those experiencing demand spikes – a common occurrence for e-commerce brands around the holidays.
UPS peak surcharges have been set based on the shipper’s volume increases since February 2020, and split into five tiers with charges varying by service. Surcharges will be implemented from Oct. 31, 2021 – Jan. 15, 2022.
- Shippers who sent 110% to 200% of February 2020 volume
- $1.15 – $2.15 per package
- Shippers who sent more than 200% to 300%
- $2.15 – $3.15 per package
- Shippers who sent more than 300% to 400%
- $3.15 – $4.15 per package
- Shippers who sent more than 400% to 500%
- $4.15 – $5.15 per package
- Shippers who sent more than 500%
- $5.15 to $6.15 per package
A full list of UPS surcharges is here.
FedEx began implementing surcharges in June. Beginning Oct. 4, FedEx will further increase surcharges for packages that require additional handling, are oversized, or are unauthorized for its Ground network through Jan. 16, 2022.
Peak surcharges on FedEx Ground Economy Package Services will apply as follows:
- $1.50 per package from Nov. 1 – Nov. 28, 2021
- $3.00 per package from Nov. 29 – Dec. 12, 2021
- $1.50 per package from Dec. 13, 2021 – Jan. 16, 2022
Additional surcharges that will apply to U.S. Express Package Services, U.S. Ground Services, International Ground Service from Oct. 4 2021 – Jan. 16, 2022 include:
- $5.95 per package (Peak — Additional Handling Surcharge)
- $62.50 per package (Peak — Oversize Surcharge)
- $350 per package (Peak — Ground Unauthorized Package Charge)
In addition to the above, beginning January 17, 2022, FedEx customers shipping more than 25,000 packages on average per week may be charged an additional $0.60 per residential package between Nov. 1 and Jan. 16, 2022. A comprehensive list of FedEx peak surcharges is available here.
How Flowspace Can Help
With shipping costs up across the board, Flowspace can help brands optimize for the lowest possible peak season shipping costs with end-to-end fulfillment.
Flowspace enables brands to drive down last-mile delivery costs by decreasing the distance to a customer’s door. The Network Optimization model identifies the optimal fulfillment centers closest to a brand’s customers, decreasing shipping distance and time, and Flowspace always works to optimize shipping costs on behalf of brands.
There’s never been a greater opportunity for e-commerce brands to capture holiday spend. Let Flowspace help you optimize for peak season and beyond. Get in touch today to learn more.