It’s that time of year again – the beginning of peak shipping season. After our analysis, the bottom line is that the 2024 peak season period will be longer – and more expensive – when compared to previous years. Neither UPS or FedEx is better on pricing, with each focusing their surcharges and increases on three key areas: (1) restructuring of demand surcharges; (2) increasing demand surcharges (year-over-year); and (3) extending the demand surcharge period.
Why the increase, you may ask? Is it really needed – especially as all the carriers continued to increase rates over last year? There are two primary drivers:
- Carrier cost and capacity. Carriers assert that these peak season increases are necessary to cover the increased volume and activity that comes as a result of the holiday shopping season each year. And, as some have indicated when rolling out this year’s increases, the calendar happens to make for a compressed holiday season this year, meaning that there will be a massive increase in volume in a shorter-than-usual time period. This puts a strain on the carriers’ resources, which need to be able to ramp up (and down again) quickly, and costs them more money.
- Economic conditions are not as healthy for carriers as they were last year, and these changes appear to be aimed at improving the financial health of these companies at the expense of the shipper.
Despite the higher costs, one advantage for shippers is the carriers have announced peak rates a bit earlier this year, which can benefit shippers by giving them a window to negotiate discounts.
Here’s some of the details on each peak season increase, and where to go for more information:
UPS
- The “additional handling” fee has increased to $7.75 per package from last year’s peak season fee of $6.90 per package. But that’s only between Sept. 29th and Nov. 23rd. In the real crunch time – Nov. 24th to Dec. 28th, the charge will be a whopping $9.95 per package.
- Large package or oversize package charges have also increased dramatically for the second year in a row, going from $74.90 in peak 2023, to $84.75 or $99 this year.
- The fee for packages that are over the stated maximums has increased from $410 last year, to $445 or $495 per package this year.
- Visit https://www.ups.com/assets/resources/webcontent/en_US/PeakDemandSurcharges_US.pdf for full details.
FedEx
Peak season begins Sept. 30 and runs to Nov. 24, 2024, and will then increase again for the dates of Nov. 25 to Dec. 29, 2024, before returning to the earlier peak increase until Jan. 19, 2025.
- The “additional handling” charge for U.S. Express Package Services, U.S. Ground Services, and International Ground Service will increase from $3.45 per package, to $7.75 to $10 a package, depending on timing. Last year the increase was to $6.95 per package.
- The “oversize” charge for the peak season increases this year from $73 last year to $84.50 to $100 per package depending on timing.
- Visit https://www.fedex.com/en-us/shipping/rate-changes/demand-surcharges.html for the full details.
DHL
Domestic shipping in the Americas will see a $50 per package increase, but international rates vary greatly.
- Their peak season runs from Sept. 15th to Jan. 31st.
- Check out https://mydhl.express.dhl/jp/en/ship/surcharges/demand-surcharge.html for full details.
USPS
- Peak surcharges resumed after a brief pause in 2023.
- Peak season will run from October 6 and remain in place through January 18th, 2025
- Charges are Service, Zone, and weight dependent.
- Visit https://about.usps.com/newsroom/national-releases/2024/0905-usps-proposes-temporary-rate-changes-for-2024-holiday-shipping-season.pdf for full Details.
The 2024 peak surcharge situation highlights why, if you’re a company that relies on shipping, it is so important to have accurate, up-to-date visibility into exactly what your shipping expenses are, so you can optimize every factor that impacts your costs – from type of delivery, to package size and zone, to even which carrier you work with. We here at Reveel are happy to help you review and optimize your shipping profile – check out how our Parcel Spend Management 2.0 platform works for more.
To take a deeper dive analysis into this year’s peak season changes, check out our latest blog.
