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As we approach the busiest shipping season of the year, businesses of all sizes are gearing up to capitalize on the increased consumer demand. However, with this opportunity comes a significant challenge: navigating the complex landscape of peak season carrier surcharges. These additional fees, imposed by major shipping carriers during the holiday rush, can substantially impact your bottom line if not properly managed.
In this comprehensive guide, we'll delve into the world of holiday shipping surcharges for 2023, examining the policies of leading carriers such as FedEx, UPS, and OnTrac/Lasership. We'll explore what these surcharges mean for your business, how they're calculated, and most importantly, strategies to mitigate their impact on your operations. Whether you're a small e-commerce startup or a large enterprise, understanding these surcharges is crucial for effective budget planning and maintaining customer satisfaction during the peak season.
Holiday shipping surcharges, also known as peak season surcharges or demand surcharges, are additional fees that parcel carriers implement during high-volume shipping months, typically from October through January. These surcharges are designed to offset the increased costs carriers incur due to the need for additional equipment, vehicles, and labor to handle the surge in package volume during this busy period.
Key points about holiday shipping surcharges:
Understanding these surcharges is crucial for businesses to accurately forecast shipping costs and set appropriate pricing strategies for the holiday season.
FedEx, one of the world's largest shipping and logistics companies, has announced significant changes to its holiday surcharge structure for 2023. Let's break down the key components of FedEx's peak season pricing:
For packages shipped via FedEx Ground Economy, surcharges will vary based on the shipment date:
FedEx is implementing a tiered residential delivery charge for Enterprise customers shipping more than 20,000 residential and FedEx Ground Economy packages during a calculation week. This surcharge will be dynamically adjusted each week based on shipping volume:
FedEx will also apply surcharges to packages requiring special handling or those exceeding certain size and weight limits:
These surcharges represent a significant increase from previous years, with some fees rising by as much as 28%. Shippers, especially those with high volume or oversized items, will need to carefully consider these additional costs when planning their holiday shipping strategies.
United Parcel Service (UPS), another major player in the logistics industry, has also announced its peak season surcharges for 2023. While slightly lower than FedEx in some areas, UPS's surcharges still represent a notable increase in shipping costs during the holiday period.
UPS will apply demand surcharges to customers who ship more than 20,000 packages during a given week. The surcharge amount is based on the percentage increase over the customer's baseline weekly average volume:
For packages requiring special handling or exceeding certain size and weight limits, UPS will apply the following surcharges:
These surcharges apply to customers who meet specific criteria related to their shipping volume and package characteristics. It's important for businesses to review their shipping patterns to determine if they'll be subject to these additional fees.
Regional carriers OnTrac and Lasership, which recently merged, have also announced their holiday surcharge structure for 2023. Their approach differs slightly from the major national carriers but still includes significant additional fees during the peak season.
OnTrac and Lasership will apply surcharges based on a shipper's baseline package volume percentage. The surcharge applies to all residential packages shipped during any weekly invoice period that exceeds 105% of the shipper's weekly average minimum package volume in June 2023:
OnTrac and Lasership have also implemented significant surcharges for packages requiring special handling or additional services:
These surcharges represent a substantial increase from previous years, with some fees rising by as much as 184%. Shippers using OnTrac and Lasership will need to carefully evaluate their shipping patterns and package characteristics to understand the full impact of these surcharges on their operations.
With carrier surcharges set to significantly impact shipping costs during the 2023 holiday season, businesses need to develop strategies to manage these additional expenses. Here are some approaches to consider:
Many surcharges are based on package size and weight. By optimizing your packaging to reduce dimensions and weight where possible, you may be able to avoid or minimize certain surcharges. This could involve using more efficient packaging materials or redesigning product packaging to be more shipping-friendly.
Relying on a single carrier during peak season can leave you vulnerable to their specific surcharge structure. By diversifying your carrier mix, you can potentially find more cost-effective options for different types of shipments. This might include using regional carriers for certain areas or leveraging USPS for lighter packages.
Some carriers offer flat rate shipping options that aren't subject to peak season surcharges. While these may not be suitable for all shipments, they can provide cost certainty for packages that fit within the specified size and weight limits.
By incentivizing customers to shop and ship earlier in the season, you can potentially shift some of your volume to periods with lower surcharges. This could involve early bird promotions or communicating shipping deadlines clearly to customers.
Consider updating your shipping policies and prices to reflect the increased costs during peak season. This might involve implementing minimum order values for free shipping, offering slower but cheaper shipping options, or simply increasing prices to cover the additional expenses.
For some businesses, it may be worth exploring alternative fulfillment methods during peak season. This could include using a third-party logistics provider (3PL) that can negotiate better rates with carriers due to their high volume, or leveraging services like FreightAmigo that can help optimize shipping strategies and reduce costs.
As businesses grapple with the complexities of peak season surcharges, FreightAmigo's Digital Logistics Platform offers a comprehensive solution to help streamline operations and manage costs effectively. Here's how we can support your business during this critical period:
Our platform allows you to compare door-to-door freight quotes for various shipping methods, including international courier, airfreight, sea freight, rail freight, and trucking solutions. This enables you to quickly identify the most cost-effective options, taking into account peak season surcharges.
With connections to over 1000 reputable airlines and shipping lines, FreightAmigo provides real-time tracking of your shipments. This visibility helps you manage customer expectations and proactively address any potential delays during the busy holiday season.
Our automated shipment document generation feature simplifies the paperwork process, reducing the risk of errors that could lead to additional fees or delays. This is particularly valuable during peak season when efficiency is crucial.
FreightAmigo offers a one-stop solution for all your logistics needs, including customs clearance, cargo insurance, and trade finance. By consolidating these services, we can help you avoid hidden costs and streamline your operations during the busy holiday period.
Our 24/7 logistics expert support ensures that you have access to professional assistance whenever you need it. This can be invaluable when navigating the complexities of peak season shipping and surcharges.
Leveraging our advanced analytics capabilities, we can provide you with insights to optimize your shipping strategies, helping you make informed decisions about carrier selection, packaging, and timing to minimize the impact of surcharges.
As we approach the 2023 peak shipping season, it's clear that carrier surcharges will play a significant role in shaping shipping costs and strategies for businesses of all sizes. The substantial increases in surcharges from major carriers like FedEx, UPS, and OnTrac/Lasership underscore the importance of careful planning and strategic decision-making in logistics operations.
While these surcharges present challenges, they also create opportunities for businesses to optimize their shipping processes and explore innovative solutions. By understanding the nuances of each carrier's surcharge structure, leveraging technology and data analytics, and considering alternative fulfillment methods, companies can navigate this complex landscape more effectively.
FreightAmigo stands ready to support businesses through these challenges with our comprehensive Digital Logistics Platform. By offering tools for rate comparison, real-time tracking, documentation automation, and expert support, we empower businesses to make informed decisions and optimize their shipping strategies during this critical period.
As you prepare for the holiday rush, we encourage you to take a proactive approach to managing your shipping costs. Consider the strategies outlined in this article, and explore how FreightAmigo's solutions can help you navigate the peak season with confidence. With the right approach and partners, you can turn the challenges of carrier surcharges into opportunities for efficiency and growth.