UPS & FedEx’s Seasonal Surcharges for 2017October 11, 2017
UPS and FedEx have both announced pricing changes for holiday season 2017. Typically, these two shipping providers adjust their pricing in tandem – when one announces a change to their shipping & handling rates, the other announces a similar strategy soon after. But this year, that’s not the case.
Effective 11/20 through 12/24, FedEx’s holiday season rates are pretty straightforward. Essentially, there will be no increased residential holiday season surcharges, except in the case of packages that are oversized (increased to $97.50 per package), unauthorized (increased to $415 per package), or that require additional handling (increased to $14 per package).
UPS on the other hand, is taking a very different approach by implementing peak season surge pricing for all packages. This pricing (+$0.27) goes into effect for Ground Residential packages from 11/19 to 12/2, stops for 2 weeks, then resumes from 12/17 to 12/23. Peak season pricing for Next-Day Air residential (+$0.81), 2nd Day Air residential (+$0.97), and 3-Day Select residential (+$0.97) will only be in effect from 12/17 to 12/23. On top of that, UPS plans to add peak surcharges to packages that exceed maximum size and weight limits.
The goal behind UPS’ peak season pricing is to offset the costs of increasing their fleet’s cargo capacity, opening temporary facilities, and hiring additional sorting and delivery staff. However, this strategy is not only different from FedEx – it’s different from UPS’ past tactics. Traditionally, UPS has handled seasonal cost overruns by negotiating the level of volume discounts with a limited number of major retail shippers. For 2017, UPS is basically passing these costs on to their clients by spreading general surge pricing across all shippers. We’ll be looking forward to hearing about the effectiveness of UPS’ pricing strategy once the holiday season ends.