The recent Peak Surcharges from both FedEx and UPS have been a hot topic lately and for good reason. Peak season for 2022 not only started earlier than in previous years, but the industry is also experiencing more updates to the surcharges from FedEx and UPS. Both Carriers apply Peak Surcharges along with the normal surcharge during this period and they are focused on larger packages and residential deliveries.
FedEx will levy Peak Additional Handling and Peak Oversize surcharges starting September 5. The holiday peak season will run from September 5 for 18 weeks to January 15, 2023. Ten seems to be the magic number for FedEx. Their Peak Additional Handling surcharge increased from $5.95 to $6.55, a 10% increase. Their Peak Oversize surcharge increased from $62.50 to $68.75, a 10% increase and their Peak Unauthorized surcharge increased from $350 to $385, a 10% increase as well.
The Peak Residential Delivery surcharge now applies to customers who ship more than 20,000 Residential and Ground Economy (SmartPost) packages per week. This threshold was previously 25,000, which means more shippers will be impacted by this surcharge.Compared to 2021, FedEx’s Peak Residential Surcharge for 2022 is more dynamic. Peaking Factor is now calculated each week to determine the surcharge amount that will be applied two weeks later, a drastic change from years prior. Last year the Peaking Factor was calculated twice during the peak season, but this year it will be calculated on a weekly basis. Combining with more tiers and higher amount for each tier, forecasting and budgeting tasks for Peak Surcharge become even harder.
UPS continues to levy Peak/Demand Surcharges to Additional Handling and Large Packages daily. The only difference being that surcharges increase more drastically during the traditional holiday peak season.
Holiday peak for UPS runs from October 2, 2022, to January 14, 2023. UPS’s Additional Handling increased from $6.00 to $6.50 per package, an 8% increase. UPS’s Large Packages surcharge increased from $60 to $70 per package, a 17% increase. And even more drastically, UPS’s Over Maximum Limits increased drastically, from $250 to $400 per package, a 60% increase! The Residential surcharge will now affect shippers who have more than 20,000 in Air/Ground Residential and SurePost packages during any week after October 2021.
Peaking Factor is calculated each week and the corresponding Peak/Demand Residential surcharge will be applied to packages exceeding 105% of baseline volume. The baseline volume is a shipper’s average weekly volume for the applicable services from June 5 to July 2, 2022. The surcharge that is then applied depending on the amount of volume above 105% of the shipper’s baseline that is shipped during the peak season period.
Compared to 2021, UPS Peak/Demand Residential surcharge for 2022 has more tiers and is more costly to shippers.
Neither UPS nor FedEx is easing up on their peak season surcharges, if anything, they are making it more onerous for shippers. With the changes in their surcharges and baseline, shippers will find it more difficult to accurately budget for their parcel spend over the coming months.