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All Things Shipping | Jun 12, 2020

Scary Shipping Things That You Actually Shouldn’t Fear—Featuring Surcharges, Delays, and Infectious Packaging

Scary Shipping Things That You Actually Shouldn’t Fear—Featuring Surcharges, Delays, and Infectious Packaging

Shippo Snippets: 

  • Both UPS and FedEx have added new domestic surcharges, BUT they are very unlikely to actually affect your business.
  • Surcharges will only kick in at extremely high volumes and for abnormally large packages.
  • Shippo aggregate data shows that the reported USPS delays are much smaller and less impactful than you may think. 
  • USPS international shipping rates are going up starting in July…well kind of. Costs for merchants WILL NOT increase. Wholesale prices for consolidators will.
  • Health experts (in this case, not Shippo) say that you won’t get COVID-19 from packages.

The Story:
Times are tough and shipping is more confusing than ever. Every article that you read about shipping these days is about delays or rate increases. As an e-commerce merchant simply trying to serve your customers, these are the last things you want to hear.

But, we’ve got good news for you—most of these reported “increases” have been blown out of proportion and in many cases, wouldn’t apply to your business. Rest easy, because we’ve cut through the noise and summarized what you really need to know right now

Surcharges and peak rates: Should you be concerned? Almost certainly not. 

Yes, it’s true that FedEx and UPS are adding new surcharges, even for domestic shipments. But, these surcharges only kick in at extremely high volumes and for abnormally large packages. So unless you are shipping upwards of 40K packages per week (and in many cases, you’d actually need to be shipping even more than this) or shipping stationary bikes, you won’t see any rate increases or surcharges.

Further, if you are using UPS through Shippo, these surcharges are waived across the board, regardless of your volume.

Here’s the fine print for those that want all of the details. 

UPS peak surcharges for domestic shipments went into effect on Sunday, May 31, 2020. 

These surcharges may apply to you if:

If your weekly shipping volume for UPS Ground and SurePost has grown by over 25,000 shipments: If your combined volume of Ground Residential and SurePost packages during the week prior to your next invoice period exceeds your average weekly volume from February 2020 by more than 25,000 packages, then you’ll see an increase of $0.30 per package. 

If you are shipping VERY large packages: For large parcels at all service levels, there will be a surcharge of $31.45 per package measuring over 96 inches in length, or 130 inches in combined length and girth.

FedEx also began adding new surcharges for certain domestic shipments on Monday, June 8, 2020.

These surcharges only may apply to you if:

You are an enterprise-level customer (usually $1M or more in shipping spend per year) and weekly shipping volume for FedEx Express and Ground exceeds 40,000 shipments or has increased by more than 120% since February. If this is true for your business, you can expect an additional surcharge of $0.30 per residential shipment.

You are shipping VERY large packages: FedEx will charge an additional $30 surcharge on larger-sized deliveries for domestic FedEx Express and FedEx Ground packages measuring over 96 inches in length, or 130 inches in combined length and girth.

You have a specific contract with FedEx for their SmartPost service level (offered only on a contract-specific basis). FedEx will impose a temporary $0.40 per package surcharge on all FedEx SmartPost packages.

Domestic Shipping Delays: Should you be concerned? Probably not.

Despite some reporting of delays and even the USPS announcing increased delivery windows for Priority Mail and First Class Mail, actual shipment data points to there not being much to worry about.

At Shippo, we see millions of shipments per month and have a unique vantage into carrier performance. The good news for you is that across USPS, UPS, and FedEx domestic delivery times remain mostly intact at pre-COVID-19 levels.

Specifically related to the reported USPS delays, we’ve compared pre-COVID-19 shipping times for the USPS’ most popular domestic services, First Class and Priority Mail, against their current performance.

Across Shippo’s network of merchants, First Class was hovering around 2.8 days from pickup to delivery on average in late February and early March. Last week, the average delivery time was 3.1 days, which amounts just shy of an 11% increase in transit time.

Priority Mail rose from 2.48 days average delivery time in late February and early March to 2.76 days as of last week—an increase of just over 11%.

Across USPS Priority Mail Express, UPS’ popular domestic services, and FedEx’s popular domestic services, we have not seen a noticeable pattern of increased delivery windows.

So, while it’s accurate to say that USPS top service levels are running slightly slower than usual, the actual impact is small. In fact, close to 90% of shipments are arriving on time, and in most cases where a delay occurs, it is at most one additional day.

New International Shipping Cost Increases: Should you be concerned? Probably Not.

Recently, there have been reports of increased costs for USPS international services starting in July. Thankfully, these changes will not have a direct financial impact on the vast majority of merchants.

The good news: If you are purchasing international postage, for example, USPS Priority Mail International or First Class International, through Shippo your rates WILL NOT increase.

The less good news: If you are using a consolidator, which leverages the USPS international network such as DHL e-commerce, UPS Mail Innovations, or Asendia to cut extra costs for high volume, cross-border shipping, you may not be able to get as good of a deal starting in July. While the exact changes are not known to us at this point, we expect the USPS to increase the wholesale rates that consolidators pay starting in July, thus leaving less room for additional discounts to be passed on to merchants. 

If you are working with a consolidator, we recommend you reach out to your specific carrier representatives to help you understand the direct impact.

These upcoming changes add to existing challenges for international e-commerce amid COVID-19. With the USPS extending delivery windows and even halting volume to certain countries along with the private carriers—DHL, UPS, FedEx—all levying additional surcharges for international shipments, international e-commerce has been an extra challenge. We’ve covered these issues in previous posts and for more info, you can check out those posts and our COVID-19 Carrier Status Page where we report the latest updates from all top carriers in one place.

Can COVID-19 Be Spread Through the Mail? Probably not.

We get this question from time to time and just wanted to reiterate that the Centers for Disease Control and Prevention (CDC), along with the World Health Organization (WHO) and the U.S. Surgeon General, have all indicated that there is currently very little risk of COVID-19 being spread through the mail.

Mario Paganini likes running and eating vegetables. Works at Shippo.

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