Editor's Note: Updates to this post will be made throughout Peak Shipping Season. Peak Shipping Season runs from September 2023 to January 2024
Every year there’s a spike in 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” (now referred to as “Demand”) surcharges. That means it’s going to cost you extra to ship packages through the holidays. Even the U.S. Postal Service has announced proposed temporary "rate adjustments" (read: increases) for the 2023 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 3+ years.
Here's What You'll Learn From This Post
- Important FedEx and UPS Peak season surcharge effective dates for 2023-2024
- Peak surcharge details
- Who is most likely to be impacted by peak surcharges
- Planning for Peak season
- Ship dates for Christmas Day delivery
- How to mitigate package surcharges
Peak vs Demand Surcharges - What’s the difference?
According to UPS’s 2023 Service Guide, the term Demand Surcharges includes Peak/Demand Surcharges and Peak Surcharges, and the terms are used interchangeably.
And according to FedEx, effective September 4, 2023, any reference to “peak” in a surcharge name will be replaced with and rebranded as “demand.”
Why the name change? Could it be that either carrier is planning on assessing overlapping “Demand” AND “Peak” surcharges at the same time? While “Demand” could imply a temporary increase in volume unassociated with “Peak”, there is still a peak season.
Latest Announcements on FedEx and UPS Peak Surcharges
On August 29th, 2023, FedEx quietly “announced” this holiday season’s Demand surcharges. They can rebrand it and call it whatever they want; however, the story is similar to years past: they want you to pay more for the privilege of using their networks during peak season. UPS has made no formal announcements for the upcoming peak season yet but is expected to follow suit when they announce their 2023/2024 UPS Demand surcharges. It is extremely important for shippers to understand how these Demand surcharges impact their costs to best strategize for mitigation.
Peak Season Timelines for 2023 - 2024
Peak shipping season coincides with the holidays and starts as early as October 2, 2023 for FedEx customers. The following is a summary of the FedEx surcharge announcement:
Fedex Peak Surcharges Announcement Summary
Note that the delivery demand surcharge is calculated weekly and the charge is determined by the peaking factor. This charge only applies to shippers that send 20,000 or more residential packages shipped during the "calculation week" compared to the weekly average of residential packages shipped from June 5, 2023-July 2, 2023. Charges can range from $1.35 for low peaking factor ground services up to a $7.40 charge for a 400%+ peaking factor for express services.
It's worth mentioning that FedEx Ground and FedEx Ground Economy services are subject to certain Demand surcharges. If you frequently utilize FedEx Ground or FedEx Ground Economy for deliveries, it's crucial to understand how peak surcharges might impact your shipping costs. To get more details on FedEx peak surcharges, visit FedEx.com here.
UPDATE: On August 29th, 2023 FedEx announced a 5.9% General Rate Increase (GRI) for 2024. Here's how the previous decade's worth of rate increases have stacked up: General Rate Increase History Report.
UPS Peak Surcharges Announcement Summary
Demand Surcharge will apply to certain UPS Air Residential , UPS Ground Residential and UPS SurePost packages, for customers who are billed for more than 20,000 packages during any week following October 2022. The Demand Surcharge amounts will apply on a weekly basis to each package over 105% of the Baseline weekly average volume for each service level, during the specified Demand Period. The highest surcharge amount applicable to the volume in excess of the Baseline weekly average volume in a given week will apply to all packages over 105% of the Baseline weekly average volume in that week within each service level. To get more details on UPS peak surcharges, see UPS.com.
UPDATE: UPS announced that effective December 26, 2023 there will be a general rate increase of 5.9%. Once again matching the increase of FedEx.
Who is Most Impacted by Peak/Demand Surcharges?
Large shippers that send lots of residentials will see a significant impact depending on their peaking factor. Additionally, shippers with oversize, additional handling, and/or FedEx Ground Economy usage will be adversely impacted.
Strategies & Planning for Peak/Demand Surcharges
To control and reduce shipping costs during the holiday peak season, preparation is key. Regardless of your shipping carrier:
- Create a free Lojistic account to verify contracted rates, surcharges, and fees.
- Plan ahead by meeting with carrier reps to discuss logistics like late pickups and capacity needs.
- Initiate early shopping campaigns to stimulate pre-holiday buying.
- Consider diversifying with additional regional and national carriers or 3PL providers.
- Opt for multiple fulfillment centers to cut down on transit times and zone density.
- Scrutinize peak season surcharges and other controllable costs, such as address corrections and third-party billing fees, that can eat into your margins.
- Stock up on essential shipping supplies in advance to avoid material scarcity and inflated prices.
Lojistic offers year-round cost reduction opportunities and verifies invoice accuracy and on-time delivery, especially important given the high volume of packages during the holiday season. For more info, contact Lojistic at 800.783.5753 or hello@lojistic.com.
Key Statistics: Looking at 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 there's room for improvement.
Look back, learn, and move forward. 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.
Holiday Shipping Deadlines
Note: The guide above is based on last year's information. We will update this with the current year's deadlines as soon as they become available. This serves as a temporary reference to help plan your holiday shipping.
Mitigate Peak Season Surcharges with Lojistic
If you’re looking for ways to mitigate peak season demand shipping surcharges and fees, log into your Lojistic account (you can create your free Lojistic account here). Lojistic automatically identifies and quantifies your unique cost reduction opportunities. 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, or send us an email at hello@lojistic.com.
Author
Bryan Van Suchtelen
Bryan Van Suchtelen
Corporate Director of Parcel Rate Services
Prior to joining Lojistic in 2015, Bryan enjoyed a 26-year career with UPS where his roles included Pricing, Field Sales and Director-level Sales Management of some of UPS’s largest customers.
At Lojistic, Bryan leverages his wealth of experience/expertise to identify and execute supply chain cost management solutions for parcel shippers of all sizes. Bryan has helped his customers reduce their shipping spend by tens of millions of dollars.