UPS Establishes New Peak Shipping Surcharge

As reported by Supply Chain 24/7
Sunday June 19, 2017

UPS today announced a new peak charge applicable during selected weeks in November and December 2017 for U.S. Residential, Large Packages and packages Over Maximum Limits. By Jeff Berman

During certain weeks in November and December this year, shippers and consumers need to prepare to pay a little more for deliveries handled by UPS in the form of what a new peak shipping charge, which the company rolled out earlier today.

This charge will be geared towards U.S. residential, large packages along with packages over maximum limits, with the company explaining it will allow it to continue to focus on its best-in-class customer value as well as offset some additional expenses that are incurred during periods of heavy volumes.

And UPS added that during the holiday peak it needs to temporarily acquire additional air and truck cargo capacity, temporary facilities, and additional sorting and delivery personnel at short-term premium rates, adding that large and heavy shipments, as well as those with unconventional shapes or size often pose operational challenges during peak periods.

“We’re focused on helping our customers achieve success during some of their most important selling seasons,” said Alan Gershenhorn, UPS Chief Commercial Officer, in a statement.

“To meet their requirements, UPS flexes its delivery network to process near double our already massive regular daily volume, and that creates exceptional demands. Our goal is to help every customer obtain the delivery capacity they need, combined with predictable and timely service they count on from UPS, even when there is limited capacity in the UPS network.”

The company’s new per-piece peak charge* for the U.S. 48 contiguous states and intrastate Alaska and Hawaii** for applicable package types and periods is summarized in this chart***:

Nov 19 to
Nov 25
Nov 26 to
Dec 2
Dec 3 to   Dec 9 Dec 10 to
Dec 16
Dec 17 to
Dec 23
UPS Next Day Air® Residential

n/a

n/a

n/a

n/a

$0.81

UPS 2nd Day Air® Residential

n/a

n/a

n/a

n/a

$0.97

UPS 3 Day Select® Residential

n/a

n/a

n/a

n/a

$0.97

Ground Residential

$0.27

$0.27

n/a

n/a

$0.27

n/a = no additional charge during this period
* Peak Surcharge to be published Sept 1, 2017 in a revised version of the UPS U.S. Rate & Service Guide
** For packages to and from Alaska and Hawaii, the surcharge is posted on ups.com/rates
***Chart does not show all potentially applicable peak surcharges. Visit ups.com/rates for more detailed information.

UPS said a Peak Surcharge will be published on September 1 in a revised version of its UPS U.S. Rate & Service Guide (PDF), and it added that it plans on applying a peak surcharge on specific international air shipping lanes over certain parts of the year.

In offering up some perspective on how many shipments the peak surcharges will impact, UPS turned to its 2016 peak/holiday season data, which included how:

  • during the 2016 holiday season, the company’s average daily volume exceeded 30 million packages on more than half of the available shipping compared to an average non-peak day, when it ships more than 19 million packages;
  • UPS hired roughly 95,000 seasonal employees during the 2016 peak shipping period;
  • for all of 2016, UPS shipped nearly 5 billion packages, with almost 3 million packages and documents shipped daily by the company’s airline; and
  • almost 3% of global GDP and 6% of U.S. GDP flows through the UPS network every day

While this is one way to address the additional costs associated with the holiday shipping period,” Jerry Hempstead, president of Hempstead Consulting, told Logistics Management that the he sad reality is that this additional charge, as worded, penalizes all shippers regardless of their shipping pattern or if they are in any way involved in the additional costs incurred by UPS during peak.

“The fee is focused on residential, but some residential like prescription drugs from Humana or Express Scripts or CVS are not seasonally related yet will be forced to shoulder costs incurred by firms like Amazon and Walmart.com,” he said.

“I can see some push back by non-seasonal shippers, and like everything in life the fee is negotiable and since it’s new some firms will negotiate an exemption (for a period of time). My gut says FedEx will like this new charge and mirror it in some way, at least in the service guide.”

Read the article here

Ken Wood is the founder of LJM Consultants. LJM helps clients negotiate “Best in Class” UPS/FedEx agreements. LJM was recently named the “best parcel auditing company in America” and was also inducted into Inc. Magazine’s Top 500/5000 fastest growing companies in America for 2013. To learn how LJM Consultants can help your company get the parcel contract you deserve, call 631-844-9500 or email kenwood@myLJM.com.