FedEx vs UPS 2018 Holiday Surcharges Announced

FedEx and UPS have announced holiday rate increases for the second year in a row, providing even more evidence that these peak season charges are here to stay.

Last year was the first year that the world’s largest carriers imposed surcharges on holiday shipping. The surcharges make sense for carriers: these are by far the busiest weeks of the year for FedEx and UPS.

Between Nov. 19 and Christmas Eve, FedEx says it handles more than 400 million packages. UPS says it moved 700 million packages during last year’s holiday season–that’s more than 1.1 billion packages shipped in the span of about six weeks.

In 2018, both carriers are sticking with their strategies from last year. UPS will charge for every package it moves between Thanksgiving and Christmas, while FedEx will only charge for large packages–those that currently carry Oversize, Additional Handling or Ground Unauthorized Package surcharges.

FedEx will charge $27.50 for Oversize Packages, $150 for Ground Unauthorized Packages and $3.20 for Additional Handling.

The United Parcel Service (UPS) uses slightly different names, but these categories look very similar to FedEx’s. UPS will charge $26.20 for Large Packages, $165 for packages Over Maximum Limits and $3.15 for Additional Handling (UPS did not have an Additional Handling surcharge during the holidays last year).

UPS will keep surcharges on all its package delivery services from Ground to Next Day Air, and increase all of them up by at least one cent.

FedEx Holiday Surcharges 2018

 

FedEx is continuing its 2017 holiday strategy of charging only for the largest and oversized packages that already carry surcharges. FedEx is not adding any surcharges for residential deliveries. The company justified this move by explaining that it didn’t want to increase the shipping costs of moving small parcels, which still make up the majority of its business.

“FedEx delivers possibilities every day for millions of small- and medium-sized businesses,” said Raj Subramaniam, executive vice president, chief marketing and communications officer at FedEx Corp. “We are demonstrating our support for these loyal customers during this critical time frame by not adding additional residential peak surcharges, except for situations where the shipments are oversized, unauthorized or necessitate additional handling.”

FedEx’s holiday rates take effect Nov. 19.

FedEx Holiday Oversize Package Surcharge

The Oversize Package Charge apply to packages that have lengths greater than 96 inches or length and girth combined measurements greater than 130 inches, shipped using either Ground or Express services.

During the rest of the year, these packages carry a fee of $80. During the holidays, that will rise to $107.50.

FedEx Holiday Ground Unauthorized Package Charge

Unauthorized packages are those that are outside the scope of what FedEx promises to deliver, meaning that they might be returned to the shipper. Whether or not they’re delivered, FedEx can charge for their handling.

These packages have lengths greater than 108 inches or combined length and girth measurements greater than 165 inches, or weights greater than 150 pounds.

A newly announced rate increase that will take effect Sept. 10, increases fees for these packages to $675 per parcel. With the holiday surcharge tacked on, moving packages this large will cost you $825–on top of weight-based charges.

FedEx Holiday Additional Handling Charge

Additional Handling charges are among the most common fees shippers encounter because they apply to a variety of packages: packages longer than 48 inches on their longest side, longer than 30 inches along their second-longest side or weighing more than 70 pounds. Products that are packaged in unusual ways may also carry additional handling surcharges.

In a rate increase due to take effect Sept. 3, FedEx will increase its Additional Handling charge to $12. During the holidays, it will rise to $39.50.

United Parcel Service Holiday Surcharges 2018

UPS also adds surcharges to its largest packages shipped during the holidays. But it also tacks very small surcharges (typically less than $1) onto all its shipments, spreading the costs of holiday shipping across the board.

UPS holiday surcharges take effect on Dec. 18–one day earlier than FedEx.

UPS Holiday Large Package Charge

UPS applies its Large Package surcharge to parcels whose length exceeds 96 inches or whose length plus girth exceeds 130 inches. This is on par with FedEx’s parameters.

For most of the year, these parcels carry a $90 surcharge (raised from $80 in July). During the holidays, it will rise to $116.20.

UPS Holiday Over Maximum Limits Surcharge

These are the packages that FedEx calls “unauthorized”  that weigh more than 150 pounds with length greater than 108 inches, or with length and girth exceeding 165 inches. In summer 2018, UPS hiked surcharges for these packages to $650. During the holidays, the fee will reach $815.

UPS Holiday Additional Handling Charge

During the rest of the year, UPS charges $19 to move packages that require additional handling and weigh more than 70 pounds. For packages weighing less than 70 pounds, the additional handling surcharge is $12.

With the addition of the holiday surcharge, requiring additional handling for a package weighing more than 70 pounds will cost $22.15.

UPS Per-Package Delivery Service Holiday Surcharges

UPS also adds small fees to packages that do not carry any of these surcharges. These range from $0.28 for parcels shipped on UPS Ground services to $0.99 for 2nd Day Air, and 3 Day Select services.

However, note that these surcharges do not apply for the entire holiday season. Some kick in between Nov. 18 and Dec. 1 covering Thanksgiving, then vanish for a few weeks. Others only run from Dec. 16 to Dec. 22.

Shippers don’t always have control over when their holiday customers order. But by looking at these rates early, supply chain managers can try to target their UPS shipments to dates that don’t carry additional fees.

What Does This Mean For Shippers in The 2018 Holiday Season?

UPS and FedEx tend to follow one another’s leads. It’s rare for them to pursue different strategies for two consecutive years. That suggests that both companies earned enough from their 2017 holiday surcharges that they don’t see a need to change.

To prepare for the 2018 holiday season, start by reviewing your shipment data and shipping costs from last year. How much volume did you ship? Did you use same-day delivery? Did you mostly have ground shipments with residential deliveries? How much did you spend on these surcharges? Is there anything you can do to your packaging or your production that could help you dodge added costs this year.

Next, retailers who ship small parcels with UPS should consider whether they can start e-commerce delivery before mid-November, or in early December when per-package surcharges aren’t applicable.

Finally, make sure you collect as much data as you can this holiday season. Think about what you’ll want to know when 2019 rolls around and carriers announce rate increases for the next holiday peak season again. Then, work with a trusted partner like Reveel to gather that information, analyze it and put it to work for your company.