Every year there’s a spike in residential deliveries during the holidays. As a result, the carriers make adjustments to their networks. And to ensure they’re as profitable as ever, both UPS and FedEx implement “Peak” surcharges. That means it’s going to cost you a whole lot more to ship packages through the holidays. Even the U.S. Postal Service has announced proposed temporary "rate adjustments" (read: increases) for the 2022 Peak Season.
In the carriers’ words, the Peak surcharges are put in place to allow them to “continue providing our customers with the best possible service.”
Keep in mind that the “best possible service” doesn’t include guaranteed deliveries, as we’ve learned over the past 2.5+ years.
Editor's Note: This post was originally published on August 16. Updates to this post will be made throughout Peak Shipping Season. Peak Shipping Season runs from early-September 2022 to late-January 2023.
Here's What You'll Learn From This Post
- Important Peak season surcharge effective dates
- Peak surcharge details
- Year over Year Peak season comparison
- Who is most likely to be impacted by peak surcharges
- How to mitigate surcharges
- USPS peak increases
- Planning for Peak season
- Tips on how to prepare + a helpful checklist
- Ship dates for Christmas Day delivery
On Friday, August 5th, FedEx quietly “announced” this holiday season’s peak surcharges, and the story is similar this year to years past: they want you to pay more for the privilege of using their networks during peak season. FedEx has again put a premium on residential packages for their larger shippers and on large packages for large and small shippers alike. UPS has followed suit. Although UPS surcharges won't kick in quite as early as FedEx's. It is extremely important for shippers to understand how these charges impact their costs to best strategize for mitigation.
If you’re looking for ways to mitigate peak shipping surcharges and fees, create your free Lojistic account or log in. Lojistic automatically identifies and quantifies your cost reduction opportunity. You can also use it to monitor and manage the impact that surcharges are having on your shipping costs. Additionally, with Compare Mode you’ll be able to easily compare your Peak vs Non-Peak shipping characteristics.
And if you need additional help understanding your cost reduction opportunities, our support team is here to help. Give us a call at 800.783.5753, ask us a question here, click on the chat in the bottom right corner or send us an email at firstname.lastname@example.org.
When does the 2022 - 2023 UPS & FedEx Peak Season Begin? And when does it end?
Peak holiday (shipping) season starts earlier every year. This year is no exception with peak season beginning as early as Labor Day. The following is a summary of the FedEx announcement:
Note that the peak residential surcharge is calculated weekly and the charge is determined by the peaking factor and only applies to shippers that send 20,000 or more residential packages per week. The peaking factor is a representation of the residentials shipped compared to the weekly average of residentials shipped from June 6th - July 3rd, 2022. The charges range from $1.25 for a low peaking factor home delivery shipment all the way to a $7.00 charge for a 400%+ peaking factor for express. To get more details on this, visit FedEx.com here.
UPDATE: FedEx recently announced a 6.9% General Rate Increase (GRI) for 2023. That's the largest year-over-year rate increase in FedEx's history! Here's how the previous decade's worth of rate increases have stacked up: General Rate Increase History Report.
The following is a summary of the UPS announcement:
Note that the peak residential surcharge is calculated weekly and the charge is determined by the demand level and only applies to shippers that send 20,000 or more residential packages per week. The demand level is a representation of the residentials shipped compared to the weekly average of residentials shipped from June 5th - July 2nd, 2022. The charges range from $1.25 for a low demand level home delivery shipment all the way to a $7.00 charge for a 400%+ of baseline volume for express. To get more details on this, see UPS.com.
UPS also announced a rate increase of 6.9% for 2023. Just as we predicted. UPS and FedEx often feed off each other. So, no matter who you're shipping with, it's going to be even more expensive!
How does this compare to prior years?
We've put together this helpful table for an easy comparison of the previous few years - and how much peak surcharges have risen in that time period.
Who is most likely to be impacted by Peak surcharges?
Only large shippers that send lots of residentials will see a significant impact depending on their peaking factor, but most shippers with oversize or additional handling will be adversely impacted.
Even the U.S. Postal Service is raising prices during Peak season?
Most likely. Yes. On August 10, the U.S. Postal Service announced a proposed temporary price adjustment. As of RIGHT NOW, the price increase has yet to receive final approval, however, we suspect it will.
See the table below for the *proposed* increases for each USPS service and the effective dates.
According the the USPS official release, these proposed increases will "keep USPS competitive while providing the agency with the revenue to cover extra costs in anticipation of peak-season volume."
What can I do to mitigate Peak surcharges?
Shippers have a few options when it comes to mitigation. For those large shippers who expect to be subject to residential peak charges, it is often best to spread out their shipping over the peak period. For retailers that often have Black Friday sales, consider alternatives like multiple, smaller sales during the time period to spread shipments out.
No such alternative is readily available for oversize and additional handling, unfortunately, but keep in mind that every item of a shipping agreement is negotiable, including peak charges. If you have been adversely impacted by peak charges in the past without relief consider discussing it with your carrier rep. Our team at Lojistic would be happy to assist with impact analysis or mitigation strategies if you would like assistance. Questions? Contact our team here.
What can I do to plan ahead for Peak Season costs?
We've put together a peak season checklist with some tips and tricks on how you can plan ahead. View or download your checklist here or click on the image below.
Look back at key statistics from past Peak Shipping Seasons.
One of the best ways to prep for Peak shipping season is to look back at your shipping data from years past. With Lojistic it's easy to compare time periods to see your peak season costs vs typical 'non-peak' costs AND year-over-year peak season costs. Just use Compare Mode.
Information like total shipping costs, surcharge impact, total number of shipments, shipments per carrier, shipments per service level, billed weight vs actual weight and others will help illuminate what went well....and where's there's room for improvement.
Look back. Learn. With Lojistic, you're equipped to make the best possible decisions during peak season, and beyond. And if you tap into the Lojistic API, you can integrate all your shipping data with the other systems you're already using to run your business. The Lojistic API is free and unlimited.
Check out the video below for key data points to look out for, or watch it on our YouTube page.
I want my customers to receive their packages before Christmas Day. When do I need to ship?
Keep your customers happy AND your shipping costs as low as possible. Use our deadline guide to see all the dates you need to know to get your packages delivered by Christmas Day for each carrier and required service level. View or download your calendar here, or click on the image below.