UPS in an effort to continue to post very profitable financial results for their business, have recently announced the continuation of their Peak/Demand Surcharges across its domestic and international service lines. These surcharges were initially scheduled to expire on January 29, 2022, but have now been extended “Until Further Notice.” According to the UPS announcement, UPS “continues to provide essential service amid the ongoing coronavirus outbreak to support the needs of our customers. Our goal is to ensure businesses and customers are able to meet their shipping needs while demand has increased for shipping services.” So the real news here for parcel shippers is that traditional Peak Season Surcharges are no longer limited to just the holiday shipping season between November and January. We suspect UPS, as well as other parcel and freight carriers will continue to implement surcharges as they see fit as demand outpaces supply. It’s anyone’s guess when the pendulum will swing in the shipper’s favor. But one thing is for sure, it will at some time.
FedEx Suspends Money-Back Guarantee on US-Based Air Services for The Peak Holiday Shipping Season
As reported by FreightWaves, FedEx announced on their website that they will suspend the guarantee on nine separate air services beginning November 1, 2021, just seven months after restoring them. The guarantees will then be restored on Jan. 16, 2022 according to FedEx. This date coincides with the expected “end of the holiday returns cycle”, which in years past brought the peak season to a close. However, the ongoing surge in delivery demand in the wake of the COVID-19 pandemic has upended traditional parcel-shipping cycles, forcing carriers to operate in what has become known as a “perpetual peak.”
FedEx Ground, the company’s ground delivery unit that will handle much of the domestic peak-season traffic, has struggled with service reliability for some time now due to the persistently increased demand and a severe labor shortage. However, there has been little discussion about the impact of increased traffic and labor shortages on the company’s air services.
FedEx reinstated the money-back guarantees on April 6, one day after rival UPS restored its guarantees on domestic next-day air services and a slew of international air offerings. UPS at that time also gave itself more latitude in its “next-afternoon” delivery schedule by extending the delivery deadline to 11:59 PM for making those deliveries and still keeping its guarantee. In the Pre-pandemic era, those deliveries were typically made around 3 p.m.
It is possible that FedEx and UPS are hedging as much as possible against demand spikes that could disrupt holiday delivery schedules. FedEx has set Dec. 15 as the cutoff date for shippers to tender parcels to its ground delivery network, which will process the lion’s share of holiday deliveries, and expect them to reach residences by Christmas Eve. For the second consecutive year, UPS will not publish a universal cutoff date for accepting ground-parcel shipments. Instead, UPS users will enter specific shipment information into a website calculator that will determine the specific cutoff date for that shipment.
Both carriers provided specific cutoff times for their expedited and air express products. The times vary depending on the service product selected. For example, parcels to be delivered by UPS in one day must be tendered no later than Dec. 23. For two-day deliveries, the deadline is Dec. 22. For three-day deliveries, the deadline is Dec. 21. Those have been UPS’ traditional cutoffs for those products, according to a company spokesman.
Unlike its time-definite products, UPS’ U.S. ground parcel service has no fixed delivery dates, though the company generally gives a range of one to five days for delivery depending on the origin and destination points. This geographic variability may make it hard for UPS to publish universal cutoff dates for peak-season ground traffic.
For those shippers expecting FedEx and UPS to reinstate their service guarantees for Ground shipments, don’t hold your breath!
According to a report from FreightWaves on Friday, August 13th, FedEx Corp. announced a series of new surcharges to cover the delivery of shipments during the upcoming Peak Shipping Season, as well as a separate 60-cents-per-package surcharge to extend into 2022.
The holiday surcharge cycle will begin on October. 4th with levies on shipments that typically move outside of FedEx’s main processing stream and that require some type of extraordinary handling.
$5.95-per-package surcharge will be imposed on shipments requiring “special handling”
$62.50-per-piece charge will be imposed on so-called “oversize shipments” that don’t fit the company’s conveyable processes
$350-per-package charge will be levied on “unauthorized” shipments that FedEx generally discourages because of their large sizes and weights which makes them more appropriate for LTL shipping and handling rather than within the parcel shipping environment.
The special-handling and oversize surcharges apply to all U.S. air and ground services, as well as international ground services. The unauthorized shipment surcharge applies on U.S. and international ground services. All three charges expire Jan. 16, 2022.
FedEx’ “Surcharge Season” really kicks in hard on Nov. 1 when a $1.50-per-piece levy will be imposed on all deliveries moving under FedEx’s Ground Economy program, (formerly branded as “SmartPost”), when FedEx tendered parcels to the U.S. Postal Service for final deliveries to private residences. Earlier this year, FedEx said it had completed a multiyear effort to bring all of that business in-house. These surcharges will be phased in under three separate timelines as follows.
The first surcharge of $1.50 per piece is set to begin on November 1 and expire on Nov. 28. A second surcharge, which will be double the prior levy to $3.00 per package), begins the following day, November 29th and runs until Dec. 12. For the third cycle, which runs from Dec. 13 to Jan. 16, FedEx will reduce the surcharge to its original $1.50 per piece.
Also on Nov. 1st, FedEx will begin six weeks of residential delivery surcharges on large enterprise customers using its domestic express and ground services. The surcharge amounts will apply to customers shipping more than a combined 25,000 weekly packages of Express and Ground residential deliveries, as well as Ground Economy.
This year, FedEx will have two holiday surcharge cycles. The first will run from Nov. 1 to Dec. 12 and is based on weekly package volumes that will move Oct. 4-17. The second cycle runs from Dec. 13 to Jan. 16, and applies to weekly volumes tendered Nov. 15-28.
The per-piece pricing formula will be determined by a “peaking factor” that takes the appropriate holiday volume, divides that sum by the weekly average residential and Ground Economy parcels shipped between Feb. 3rd and March 1, 2020 — the last period of normalized pre-COVID-19 volumes, and then multiplies that number by 100, FedEx said.
Effective Jan. 17, customers whose volumes made them subject to the holiday surcharge will pay a 60-cents-per-piece levy on those shipments. There is no end date to that surcharge cycle, FedEx said.
Need help navigating the holiday surcharge madness? Reach out to our logistics experts today to learn how you can get ahead of rising shipping costs.
As a reminder, back in May, FedEx announced that they would be updating their Fuel Surcharge Tables to better reflect current market conditions. FedEx, as well as all other freight carriers adjust their Fuel Surcharge percentages on a weekly basis as the price of fuel fluctuates. This amendment to FedEx’ Fuel Surcharge Tables will officially go into effect on June, 21, 2021.
The updates will result in a change in the Price per Gallon bands used to calculate both US Gulf Coast Spot Prices for Jet Fuel, (applied to FedEx Express Service rates), as well as the US Highway Average Price of Low Sulphur Diesel Fuel, (applied to FedEx Ground services.) It is expected that these rate table changes will result in an overall Fuel Surcharge increase of approximately 1%. This is on top of already increased costs of fuel, as well as many new and ever increasing surcharges and accessorial fees. While carriers may believe these increases are not staggering increases, they are increases non-the-less. Let’s also keep in mind that recent reports indicate the rate of inflation is also increasing and that too will result in higher prices across the board for all consumers. It’s like the old saying of being “Nickeled and Dimed to Death.” However, as we have seen over the past year and a half, we are not talking about Nickels and Dimes, but rather dollars and serious ones at that.
The Fuel Surcharge Tables FedEx is published will become effective on 6-21-2021.
Effective June 21, 2021, FedEx will be increasing their Peak Additional Handling Surcharges.
FedEx, in their announcement last week stated they have been keeping package volume moving throughout the COVID-19 pandemic, which they certainly have. FedEx also stated that “the impact of the virus continues to generate elevated volumes, high demand for capacity and increased operating costs across our network. To provide our customers with the best possible service during this challenging time, the following surcharge increases are being implemented:”
The surcharges that will be affected by these increases are as follows:
Peak Oversize Surcharge
Peak Additional Handling Surcharge
Peak Residential Delivery Surcharge
International Surcharges which were formally named “Temporary Surcharges” and are now named “Peak Surcharges.
Full details are available by clicking the link below which will take you to the official FedEx announcement. As we have stated over and over again, controlling these continually spiraling shipping costs MUST become an immediate priority for every company regardless of their size. If you need help determining how to control shipping costs, please contact us immediately as we continually help our clients improve their bottom lines during these very difficult times.
Need help making sense and clarity on FedEx Surcharges? Contact us today to learn more!
We reported earlier today that UPS has reinstated modified versions of their Guaranteed Service Delivery Refund Program. Now, our friends at FedEx have made an announcement that they too will be reinstating their Guaranteed Service Delivery Refund Program effective today, April 6, 2021 for some of their Express Delivery Products. As with UPS’ announcement, FedEx has not yet indicated whether they will reinstate the Guaranteed Service Refund Programs for any of their Ground Service Products.
Want to make sure you take advantage of the Service Delivery Refund Program? Reach out to us today
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