UPS Announces Peak Surcharges
UPS has recently announced their upcoming peak surcharges as the holidays get closer and closer. As per usual, these surcharges will hit high-volume shippers harder than anyone else. Understanding how these surcharges will affect your business can help you better understand how you can maneuver your time-critical logistics this upcoming holiday season.
Why Do Surcharges Exist?
First and foremost, it’s important to understand why surcharges exist. While it may not seem fair for shippers, these surcharges are implemented to try and slow down the rush on shipping. Without these surcharges, the busy months – think the holidays – will be a complete and total madhouse.
Unfortunately, most shipping companies will not be able to withstand this spike and demand without some type of safeguard. Surcharges give shipping companies an extra incentive to meet shipping needs. On top of that, it gives them the resources necessary to ensure shipping needs can be met. Most importantly, it dissuades those with non-essential shipping needs from using shippers during the peak shipping season.
When Will the Surcharges Take Place?
UPS says the surcharges will start on October 30th and run through January 14th. This is widely considered peak shipping season, as this is when people are purchasing and returning gifts for the holidays. The levies will apply to customers who were billed for more than 20,000 weekly packages during any week after October 2021.
Customers who use one or more of four different services will also be hit with surcharges as their combined weekly peak volume exceeds the threshold. The four services include Ground Residential, Next-Day Air Residential, All other Air Residential and SurePost. With SurePost, bulk volumes are inducted into the Postal Service network for last-mile deliveries for residences.
How Much Will the Surcharges Cost?
The surcharges will vary from business to business. Rates will be based on shipper volumes and specific service levels. The peak surcharges will fall between $1.25 per package to $7 per package. Someone who uses UPS Ground Residential Service and tenders 300% to 400% more weekly peak volumes to the service than it does during nonpeak periods will pay a $4.25 per-package surcharge.
Someone who uses the carrier’s Next-day Air Residential services will pay a $2.75-per package surcharge if the weekly peak volume is between 125% and 150% higher than the volume tenured during nonpeak periods.
How are Surcharges Calculated?
UPS calculates the surcharges by selecting a nonpeak baseline month and comparing weekly volumes during that month to weekly volumes during the peak periods. The further a shipper’s peak volume exceeds the weekly levels during the nonpeak period, the higher the surcharge during the peak period.
In 2021, UPS selected February 2020 as the month for normal volume. This was the last month before the pandemic hit, allowing UPS to accurately capture volume before the pandemic. In 2022, UPS has set June as the default baseline month. However, if volume during September does not exceed 80% of the traffic in June, September will become the new baseline month.
Do You Need Help With Your Logistics?
Dealing with surcharges and other shipping headaches can be difficult for busy business owners and managers. If you’re looking to rid yourself of this burden, our team at Trifecta Transport is here to help. We’re ready to handle all of your logistics needs to ensure your business is ready to provide your customers with the products and services they need. Please contact our office for more information.