Read about the recent UPS peak rate adjustments and consider how it could change your parcel shipping strategy
Following other peak season surcharge announcements from FedEx and the USPS, UPS has released their peak/demand surcharge schedule. With a later start than FedEx, the surcharges will take effect on October 30 and run until January 14, 2023.
Here are the highlights of the announcement:
Calculations for UPS Surcharges
The baseline for who this will apply to is customers who are billed for more than 20,000 packages during any week following October 2021, and once this threshold has been met, the surcharges will apply until further notice on all service levels. This number is down from last year’s 25k but now matches FedEx’s package count.
During this time period, peak surcharge amounts will apply on a weekly basis to each package over 105% of the baseline weekly average volume for each level – most importantly here, the highest surcharge amount will apply to all packages over 105% of the baseline weekly average volume in that week within each service level.
Mirroring FedEx’s baseline and calculation periods, new this year is a different baseline period. Both UPS and FedEx referenced February 2020 last year, they are now looking at the month of June, more specifically, June 5, 2022, through July 2, 2022. One caveat is if a shipper’s average weekly volume from September 4, 2022, through October 2, 2022, is less than 80% of its average weekly volume from June 5, 2022, through July 2, 2022, then the baseline volume of September 4, 2022, through October 2, 2022, will be used.
Residential UPS Surcharges
The surcharges for the specific amounts over the baseline weekly average volumes are as follows:
105%-125% of Baseline Volume
- UPS SurePost & UPS Ground Residential: $1.25
- UPS Next Day Air Residential & All Other UPS Air Residential: $2.25
These are just a minor increase from 2021 ($1.15 for UPS Ground Residential and UPS SurePost, and $2.15 for UPS Next Day Air and other Air Residential). To compare to last year’s surcharges: UPS Peak Surcharges for 2021.
125%-150% of Baseline Volume
- UPS SurePost & UPS Ground Residential: $1.75
- UPS Next Day Air Residential & All Other UPS Air Residential: $2.75
150%-200% of Baseline Value
- UPS SurePost & UPS Ground Residential: $2.00
- UPS Next Day Air Residential & All Other UPS Air Residential: $3.00
200%-300% of Baseline Value
- UPS SurePost & UPS Ground Residential: $2.50
- UPS Next Day Air Residential & All Other UPS Air Residential: $3.50
300%-400% of Baseline Volume
- UPS SurePost & UPS Ground Residential: $4.25
- UPS Next Day Air Residential & All Other UPS Air Residential: $5.25
These are quite the jump from the last couple years, especially when you compare it with fees over 400%. For example, 2020’s volumes for any number that surpassed 300% was $3.00 on UPS Ground Residential and UPS SurePost, and $4.00 for UPS Next Day Air and other Air Residential.
Greater than 400% of Baseline Volume
- UPS SurePost & UPS Ground Residential: $6.00
- UPS Next Day Air Residential & All Other UPS Air Residential: $7.00
Additional UPS Handling Surcharges
Additional Handling and large packages will incur peak surcharges, as they have in the past.
- Additional Handling: $6.50 – This is up $.50 from 2021.
- Large Package Surcharge: $70.00 – This is up $10.00 from 2021.
- Over Maximum Limits: $400.00 – This is up from $250.00 in 2021. Pre-peak and through October 1, there has been no charge for this.
How to Manage Peak Season Surcharges
The best strategy when you feel stuck with mounting surcharges and fees that change dynamically, is to have options. If you have access to a platform where you can leverage multiple carriers, you can find the right carrier mix to process shipments in the most cost-effective way. [Learn more about why Single Carrier Parcel Shipping Strategies are Dead.]
The supply chain technology that facilitates innovative parcel strategies and tactics, like Rate Shopping, within your carrier mix is the next step of the future-proofed supply chain. Multi-carrier shipping software is a robust, powerful platform that uses speed and flexibility to deliver on customer deliver expectations. Seamlessly integrated into your Enterprise Software Stack (ESS), this shipping solution offers better control of your shipping data whether that is costs, documents, or tracking numbers, so you can implement parcel strategies that help you win – whether that is carrier volume balancing, zoneskipping, Advanced Date Shopping, or Business Intelligence. [Explore How it Works]
Learn more about what is on the shipping horizon and other trending parcel topics at the 2022 ProS Who Know.