FedEx & UPS Peak Season Surcharges

October 14, 2021 by Maria Fagerland

UPS, FedEx, and the USPS will be instating peak season surcharges again in 2021. Shipping costs for ecommerce businesses will rise this holiday season. Since there’s no escaping the additional expense, businesses should seek to minimize their operational expenditures. We’ve included the following information to assist your business in preparing for one of the busiest times of the year.

FedEx

Fortunately, FedEx will not apply peak season surcharges to most residential deliveries, except for packages that are oversized, unauthorized, or those that require additional handling between November 19 and December 24.

Surcharge Name	Applicable Services	Surcharge Amount	Effective Date
Peak — Additional Handling Surcharge	U.S. Express & Ground Services	$5.95 per package	October 4, 2021 – January 16, 2022
Peak Surcharge	FedEx Ground Economy (SmartPost)	$1.50 per package	November 1, 2021 – November 28, 2021
Peak Surcharge	FedEx Ground Economy (SmartPost)	$3.00 per package	November 29, 2021 – December 12, 2021
Peak Surcharge	FedEx Ground Economy (SmartPost)	$1.50 per package	December 13, 2021 – January 16, 2022
Peak — Ground Unauthorized Package Charge	U.S. Express & Ground Services	$ 350 per package	October 4, 2021 – January 16, 2022
Peak — Residential Delivery Charge	U.S. Express & Ground Services	$ 1.15 – $ 6.00	November 1, 2021 – January 16, 2022
Peak — Oversize Charge	U.S. Express & Ground Services	$62.50 per package	October 4, 2021 – January 16, 2022
Residential Delivery Charge1	U.S. Express & Ground Services	$0.60 per package	Beginning January 17, 2022

UPS

UPS has applied peak season surcharges on ground-residential deliveries since 2018. Shippers often pay a delivery area surcharge for ground-residential shipments from November through December. COVID-19 ensured that these fees rose in 2020 due to a high infection rate and skyrocketing demand that was generated by eCommerce shops. 

UPS and other logistics providers apply these additional surcharges to help cover the costs that come with fulfilling customer expectations during busy times of year like the fall and winter holidays. In 2020, these surcharges were reinstated in January, after the holidays had passed. The additional funding was required to offset the cost of hiring thousands of additional temporary workers. 

How to minimize the pain of shipping surcharges

Any companies shipping large volumes of parcels during the upcoming holiday season will feel the impact of these peak season surcharges. The following steps can help businesses minimize their operational expenditures, however:

Early Shipping Discounts

• Retailers that offer UPS-Only shipping may be able to benefit from a discount when shipping products between December 3rd through 14th. This discount was available in some years past. This has historically eliminated additional residential discounts and served to equalize the spike in sales leading up to Christmas. 

Explore USPS

• The U.S. Postal Service is levying additional delivery surcharges to offset elevated holiday season shipping demand. The USPS is not, however, adding any residential delivery surcharges, which may offer a competitive advantage over UPS and FedEx. Given that the USPS delivers to more than 150 million addresses each year, there’s ample scope to bolster cashflows through peak season surcharges alone.
• It’s estimated that the USPS shipped more than one billion packages in 2020’s holiday season alone. Across UPS, USPS, and FedEx, more than 7 million packages were shipped per day.

Use FedEx Home Delivery

• FedEx, much like UPS, has offered home delivery discounts for residential ground shipments between Dec. 17th through Dec. 21st in previous years. This has provided an economically viable option for businesses to bypass holiday shipping surcharges. FedEx Home Delivery allows businesses to deliver products quickly and without breaking the bank. 

Encourage business addresses

• When customers request that packages ship to business addresses, residential delivery fees are eliminated. Further, risks such as package theft are substantially reduced. You can entice customers to do this by offering shipping or purchase discounts based on their final shipping address. While doing so could be messy without a solid WMS, ShipWorks provides a hands-off address verification system as part of our core offerings. 

Audit your invoices for late deliveries

• At the center of any online seller’s shipping strategy is to ensure that products are available for customers as soon as it has been promised. Every ground and express package sent is guaranteed to arrive on time or it’s free. FedEx does provide some exceptions, though so customers should be aware of these exceptions and shop prices accordingly. 

Conclusion

Most shippers either eat these peak season surcharges or pass them through to their customers in the form of increased shipping costs. Before you wind up buried in the holiday shipping season, take some time to audit your shipping invoices to understand when you’re taxed by each surcharge.

Adjust your shipping strategy based on business rules that apply to least-cost shipping with the correct WMS.