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Time to Take a Peek at Peak Surcharges

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Now that Thanksgiving has come and gone, we are into the prime shipping season, or Peak Season as everyone in the shipping world calls it. If you are not sure of that, take a quick look at the rates that you are being charged by your carriers. Even if you are not a large volume shipper, it is very likely that you will see some type of Peak Surcharges on your carrier bills now. Believe it or not, some of these have been in place since last year! 

It is important to note that you do not need to be a large volume/ E-Commerce shipper to get hit with these unplanned/ unexpected charges. There are plenty of Peak Surcharges to go around for everybody!

For example, UPS has been charging “Demand Surcharges” on shipments coming to the US from Asia since August of 2022.  They have been billing a Demand Surcharge for these shipments, that varies from $.65 to $1.54 per lb., depending on origin and service.  There are also Demand Surcharges on other International shipments that have been in place since January of 2022! 

FedEx has also had Demand Surcharges in place for International Shipments well in advance of Peak Season. Like UPS, these surcharges vary based on Origin, Destination, and Service. Some of the International Demand Surcharges that FedEx lists are as much as $1.90 per lb. 

So, if you are thinking that your safe since you don’t do much International Shipping, think again. There are Peak/ Demand Surcharges that are in place for some accessorials including: Additional Handling, Oversize/ Large Package Surcharges, and Over Limit/ Unauthorized Packages. Shippers should pay very close attention to these package size based charges for a couple of reasons. 

First, some of these charges are extreme. For example, the Demand Surcharge for Large Packages will increase the cost of this accessorial charge by over $70 for both carriers (an increase of over 50% in some cases).

Next, Carriers weigh and measure in motions systems are not perfect. We have seen many examples of shippers being charged for Additional Handling, or Large Package surcharges on packages that don’t have the dimensions to qualify for these surcharges. The bottom line is that this is not a fine science. It’s bad enough to be improperly billed for these charges. But, having a Peak Demand Surcharge on top of this is like rubbing salt in the wound! 

If you are a larger volume shipper (defined as a shipper that has sent out more than 20K packages in a week), you may have been paying Peak Surcharges on Residential shipments throughout the year. UPS literature indicates that certain larger shippers could be billed $.40 to $.60 more per package throughout the year.  With both UPS and FedEx, these charges ramp up as you get into October and November. 

At this point, you might be thinking “Why is this all so relevant?”. Well here’s why- Don’t you find it interesting that carriers are still charging Peak/ Demand surcharges when volume has been lower, and there seems to be more capacity in the market place? 

We have all heard about the softness in the economy for the past 6 months, and the impact that this has had on Carrier volume. UPS has acknowledged a loss of volume due to their negotiations with the Teamsters during the summer. From what we can tell, Both UPS and FedEx are fighting for volume.  So why are they both still charging Peak/ Demand Surcharges? The answer is simple- BECAUSE THEY CAN AND WILL IF YOU LET THEM!

Hopefully by now you are thinking- Well what can I, and should I be doing about this? You might be thinking that you could have some leverage with carriers to try to improve your rates and discounts. You may be right here. You also may be thinking about picking up the phone to call your carrier rep to kick off negotiations or request an improved agreement. But before you do that, you need to think about the complexity and reality of negotiating Small Parcel agreements. 

We often see carrier offers that on the surface, provide the appearance that they will save the shipper money. We have even had carrier reps tell shippers that their new offers will save them X amount of dollars per year. However, when we performed our proprietary analysis, we have seen some interesting results. We have seen many scenarios where there are no savings at all, or even dis-savings! The bottom line is that the carrier pricing folks are experts at the “smoke and mirrors” game. 

Even if you do have the ability to analyze a carrier proposal, and were able to confirm savings opportunities, how would you know that this is the best that you could expect from carriers? Do you really want to Bench Mark offers against your own rates? This does not seem to make a lot of sense. 

What makes sense is to partner with a company that has had long term experience and success with helping shippers analyze carrier proposals, and that can drive optimum cost savings. After all, the savings that we drive can have a big impact on your profit margins and bottom lines. 

Additionally, we do not limit our cost saving initiatives to improved Carrier contracts. Our solutions are often multi-faceted to ensure maximum value for our clients. We always look at the big picture, and seek to provide solutions that create customers for life. How else do you think we have remained in business for close to 50 Years! 

Please reach out to us today to find out if your company qualifies for our free Comprehensive Logistics Assessment. We are anxious to help you put an end to the perpetual Peak Season that has been going on for the last couple of years! 

 

USPS Resumption Notice

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International Service Resumption Notice – effective June 2, 2023

Effective Friday, June 2, 2023, the Postal Service™ will resume acceptance of mail destined to the following:

Libya

This service resumption affects the following mail classes: Priority Mail International® (PMI), First-Class Mail International® (FCMI), First-Class Package International Service® (FCPIS®), International Priority Airmail® (IPA®), and M-Bag® items.

The Postal Service is closely monitoring service impacts related to the COVID-19 pandemic and will continue to update customers until the situation returns to normal.

Please visit our International Service Alerts page for the most up to date information: https://about.usps.com/newsroom/service-alerts/international/?utm_source=residential&utm_medium=link&utm_campaign=res_to_intl

International Service Suspension Notice – effective June 2, 2023

Effective June 2, 2023, the Postal Service™ will temporarily suspend international mail acceptance to destinations where transportation is unavailable due to widespread cancellations and restrictions into the area.

Customers are asked to refrain from mailing items addressed to the following country, until further notice:

Myanmar

This service disruption affects Priority Mail Express International® (PMEI), Priority Mail International® (PMI), First-Class Mail International® (FCMI), First-Class Package International Service® (FCPIS®), International Priority Airmail® (IPA®), and M-Bag® items.

Unless otherwise noted, service suspensions to a particular country do not affect delivery of military and diplomatic mail.

For already deposited items, other than Global Express Guarantee® (GXG®), Postal Service International Service Center (ISC) employees will endorse the items as “Mail Service Suspended — Return to Sender” and then place them in the mail stream for return.

According to DMM 604.9.2.3, customers are entitled to a full refund of their postage costs when service to the country of destination is suspended. The detailed procedures to obtain refunds for Retail Postage, eVS, PC Postage, and BMEU entered mail can be found through the following link: https://postalpro.usps.com/international-refunds

USPS Pricing Updates and Improvements

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USPS Ground Advantage Reduces Prices, Simplifies Shipping Solutions and Improves Service Reliability

The United States Postal Service has filed with the Postal Regulatory Commission, (PRC) to adjust prices for some shipping services and enhancing ground shipping solutions.

The U.S. Postal Service today established proposed published pricing for its new product offering, “USPS Ground Advantage.”  Pending favorable review and comments from the Postal Regulatory Commission, USPS Ground Advantage would launch on July 9.  At launch, USPS Ground Advantage would provide a simple, reliable and more affordable way to ship packages up to 70 lbs. in two-to five business days.

USPS Ground Advantage Will Feature

  • $100 insurance included for both retail and commercial customers, USPS Ground Advantage outbound and return parcels.
  • Package forwarding and return to sender endorsements will be included for the USPS Ground Advantage product offering.
  • Free package pickup on the carrier’s route.

Published prices for USPS Ground Advantage will decrease 1.4 percent relative to current Parcel Select Ground and First-Class Package Service pricing. USPS Ground Advantage Retail prices will decrease 3.2 percent and USPS Ground Advantage Commercial published prices will decrease 0.7 percent.

Over the past year the Postal Service has focused on strengthening its shipping solutions as part of its 10-year strategic plan for service excellence, on-time delivery, and revenue generation from enhanced package delivery services. With more than 31,000 Post Offices, various pickup options, including free package pickup, and no surcharges for fuel or residential delivery, the Postal Service provides exceptional value and convenience to customers.

Shipping Service prices are primarily adjusted according to market conditions. The Postal Service governors evaluate shipping rates and fees and adjust them when needed as part of the Postal Service’s 10-year ‘Delivering For America” plan to return the organization to financial sustainability and achieve service excellence while maintaining universal six-day mail delivery and expanding seven-day package delivery.

The complete Postal Service price filings with prices for all products can be found on the PRC website under the Daily Listings section at prc.gov/dockets/daily. The Postal Service provides additional resources to assist customers regarding price changes. These tools include price lists, downloadable price files and Federal Register Notices. This information will be available on the Postal Service’s Postal Explorer website at pe.usps.com/PriceChange/Index.

Could this new USPS service and price reduction be viewed as an option for parcel shippers just in case the Teamsters decide to stage a work stoppage at UPS?  We’ll just have to wait and see.  Reach out to us if you have questions about how this new pricing and improved service offerings will affect your operations.

USPS New Requirements

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US Postal Service Implements New Requirements for Using Electronic Indicator for Hazardous Materials

On April 21, 2023, the US Postal Service issued its final rule requiring Electronic Indicators when shipping Hazardous Materials (HAZMAT) and Dangerous Goods (DG). The final rule will require use of Service Type Codes (STCs) specific to HAZMAT/DG shipments effective July 9, 2023. The final rule also states that effective January 21, 2024, mailers of HAZMAT/DG must implement the new two-dimensional barcode or Intelligent Mail Matrix Barcode (IMmb) when shipping, in addition to the existing Intelligent Mail Package barcode (IMpb). On November 30, 2022, the Postal Service issued a proposed rule outlining several proposals to improve identification and processing of HAZMAT/DG goods.

In this final rule, the Postal Service revises Publication 52, Hazardous, Restricted, and Perishable Mail (Pub 52) to incorporate new requirements for mailers to use unique STCs and extra service codes (ESCs) within the tracking barcodes and electronic data submission for package shipments containing HAZMAT or DG. This rule standardizes the acceptance and handling of shipments containing HAZMAT/DG by collecting electronic data and will allow the Postal Service to create electronic manifests for the Postal Service’s air carrier suppliers. The following items are clarified in this rule:

  • When shipping HAZMAT internationally, dangerous goods (DG) terminology is used rather than HAZMAT.
  • HAZMAT and DG are not eligible to be mailed in letter or flat-sized mail pieces.
  • These new requirements are in addition to current Pub 52 regulations and do not exempt mailers from complying with existing standards.
  • When shipping to Army Post Office (APO), Fleet Post Office (FPO) or Diplomatic Post Office (DPO) destinations, mailers must follow international DG regulations. This mail is only treated as domestic for pricing purposes.
  • Packages being sent domestically containing new electronic devices, in original unopened packaging or manufacturer certified new or refurbished devices, that bear no lithium battery marking, are exempt from applying STCs and ESCs. This exemption does not apply to packages being sent internationally or to APO/FPO/DPO destinations.

These packages must meet the following:

  1. Only button cell batteries installed in equipment; or
  2. no more than 4 lithium cells; or
  3.  two lithium batteries installed in the equipment they operate, (e.g., cell phones, tablets, digital readers, or glucose monitors etc.) are not required to bear the lithium battery mark. and
  4. when there are no more than two mail pieces in a single consignment, per Pub 52, Section 349.
  • The Federal Register Notice, 87 FR 73459 published on 11/30/2022, required mailers to provide physical separation of HAZMAT/DG from non-HAZMAT/DG packages. Upon full implementation of the electronic indicators on July 9, 2023, mailers may submit a request for a release from the requirement to separate HAZMAT/DG from non-HAZMAT/DG when tendering to the Postal Service. Internal Postal Service data will be utilized to validate compliance with this rule prior to approving customer release of the separation requirement. The requests can be submitted to the Director, Product Classification, 475 L ‘Enfant Plaza, SW Rm 4446, Washington DC 20260-5015.

The final rule recommends mailers to adopt usage of the appropriate ESCs for the type of HAZMAT being shipped, the inclusion of “H” in the Service Box on shipping labels and adding the word “HAZMAT’ within the banner text with the standard Intelligent Mail package barcode (IMpb) for domestic shipments. The final rule also includes the STC and ESC tables for all HAZMAT/DG. Mailers and Customers can find the final rule on the Federal Register website link:

https://www.federalregister.gov/documents/2023/04/21/2023-08479/electronic-indicators-for-the-mailing-of-hazardous-materials

The Postal Service is revising Publication 52, Hazardous, Restricted, and Perishable Mail (Pub 52), to incorporate the new requirements. Although, effective July 9, 2023 and January 21, 2024, the Postal Service will incorporate these revisions into the next edition of Pub 52, which will be available via Postal Explorer at pe.usps.com.

For more details or if you have any questions, please reach out to ICC; we’re here to help!

US Postal Rates Going Up, Again!

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U.S. Postal Service Files Notice with PRC for New Mailing Services Pricing

In announcing this latest postage increase, the US Postal Service stated the increases are a result of the following conditions:

  • Actions taken to address continued elevated inflation and prior years defective pricing model
  • No price increase for USPS Connect Local, which gives businesses of all sizes the ability to reach local customers at affordable rates
  • Reduced pricing for some Retail Priority Mail Flat-Rate products below the temporary price currently in place

On April 10, 2023, the United States Postal Service filed notice with the Postal Regulatory Commission (PRC) of mailing services price changes to take effect July 9, 2023. The new rates include a three-cent increase in the price of a First-Class Mail Forever stamp from 63 cents to 66 cents.

If favorably reviewed by the Commission, (which we are certain will be the case), the proposed increases will raise First-Class Mail prices approximately 5.4 percent to offset the rise in inflation. The price changes have been approved by the Governors of the U.S. Postal Service.

The price for 1-ounce metered mail will increase to 63 cents, and the price to send a domestic postcard will increase to 51 cents. A 1-ounce letter mailed to another country would increase to $1.50. There will be no change to the single-piece letter and flat additional-ounce price, which remains at 24 cents. The Postal Service is also seeking price adjustments for Special Services products including Certified Mail, Post Office Box rental fees, money order fees and the cost to purchase insurance when mailing an item.

The proposed Mailing Services price changes include:

Current PricesPlanned Prices
Letters (1 oz.).63 cents.66 cents
Letters (metered 1 oz.).60 cents.63 cents
Domestic Postcards.48 cents.51 cents
International Postcards$1.45$1.50
International Letter (1 oz.)$1.45$1.50

As operating expenses fueled by inflation continue to rise and the effects of a previously defective pricing model are still being felt, USPS stated that these price adjustments are needed to provide the Postal Service with much needed revenue to achieve the financial stability sought by its “Delivering for America 10-year plan.” According to USPS, the prices of the U.S. Postal Service remain among the most affordable in the world.

The PRC will review the changes before they are scheduled to take effect. The complete Postal Service price filing, with prices for all products, can be found on the PRC website under the Daily Listings section at prc.gov/dockets/daily. The Mailing Services filing is Docket No. R2023-2. The price tables are also available on the Postal Service’s Postal Explorer website at pe.usps.com/PriceChange/Index.

New Postal Product: Ground Advantage

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As part of its overall strategy to enhance its shipping offerings, the United States Postal Service (USPS) filed a procedural filing with the Postal Regulatory Commission (PRC) notifying the commission of the Postal Service’s intention to replace its existing First-Class Package Service category with USPS Ground Advantage. USPS Ground Advantage will feature two-to five day service standards for packages up to 70 pounds.

The filing streamlines and simplifies package shipping options for customers and enhances the Postal Service’s ground product offering with the anticipated summer 2023 launch of this improved ground product.

In the filing, the Postal Service is notifying the Commission of its intent to rename the First-Class Package Service product and introduce the Postal Service’s enhanced ground product — USPS Ground Advantage. USPS Retail Ground, Parcel Select Ground, and First-Class Package Service will be incorporated into USPS Ground Advantage.

Over the past year, the Postal Service has focused on improving its package offerings by improving service reliability, lowering prices, and simplifying shipping product offerings, including:

  • Lower Prices for Shipping Services. In January 2022, the Postal Service implemented new pricing for Shipping Services. As a result of the implementation of approved price changes, shipping rates for USPS Retail Ground products were reduced by 7 percent, and rates for Parcel Select Ground were reduced by 12 percent, on average. USPS Retail Ground and Parcel Select Ground prices remain at the lowered, January 2022 rates.
  • Improved Reliability Through Upgraded Service Standards. In August 2022, the Postal Service implemented upgraded service standards for its USPS Retail Ground and Parcel Select Ground products, aligning service standards with the current First-Class Package Service product within the contiguous United States. Service standards for these products were accelerated from two-to-eight-days to two-to-five-days for the same affordable price.
  • Simplifying Shipping Product Offerings. On October 28, 2022, the Postal Service was granted approval by the PRC to remove USPS Retail Ground from the Competitive product list, eliminate Parcel Select Ground from the Parcel Select product, and expand First Class Package Service to 70lbs among other enhancements.

Clearly USPS is continuing its efforts to compete head on with UPS and FedEx for Ground package services. With a possible work stoppage at UPS this summer, this new service and previous lower price offerings might be just what the doctor ordered.

Need help navigating this change or looking to get a hold of your shipping expenses?  Reach out to one of our parcel experts today to help.