Navigating the world of shipping carriers—the rates, service levels, areas of operation, and many other intricacies that come with logistics—is no easy feat, even for those of us who deal with shipping on a daily basis.
To further complicate things, these intricacies are rarely static. Rates change every year. SLAs vary based on capacity. Surcharges come and go. This is why we started our Scary Shipping Things That You Actually Shouldn’t Fear, blog series to demystify the complexities of shipping and give you what you need to know to help run your business.
In this second edition, we’ll analyze recently announced UPS holiday surcharges (and how you can avoid them), upcoming FedEx peak surcharges, rumored USPS delays (and what the real data says), plus some new carrier integrations coming down the pipeline from Shippo.
UPS Surcharges: What You Need To Know
The WSJ reported on UPS’s plans for new holiday surcharges last week. We’ve gotten a lot of questions from merchants, so we figured that it might be helpful to break down the impacts of these upcoming surcharges.
Do they apply to you? Only if you ship over 25,000 packages or more per week with UPS.
When will they take effect? These are meant to apply to the peak holiday season. UPS plans to start adding these charges mid-November through January 16, 2021.
How expensive will the surcharges be? Surcharges will start at $1 per shipment for ground and $2 for air shipments. The charges scale up to $3 and $4 respectively based on how far over the 25,000 threshold a business goes.
Here’s the good news: to support SMBs, UPS will not apply 2020 Peak Season Surcharges to merchants on Shippo under the UPS Digital Access Program*.
A Look at Upcoming FedEx Surcharges
FedEx announced on August 18, 2020, that it will also be adding new surcharges for the holiday season. And overall, it’s pretty similar to what we saw a couple of months ago—you’d have to be shipping massive quantities or extremely large packages to be impacted. Here are some key takeaways.
When do these surcharges go into effect? The first wave kicks in on October 5 for oversized and additional handling charges. Then on November 2, new peak surcharges will go into effect for FedEx Ground and FedEx Express. Surcharges for FedEx SmartPost (which is only offered on a contract basis) will arrive in three waves based on peak season stages, beginning on November 30, 2020.
All surcharges will be in effect through January 17, 2021.
Will you be affected? In general, probably not, unless you are an enterprise-level customer shipping more than 70,000 domestic packages via FedEx Ground and/or FedEx Express per week. If your shipping volume during the base period of October 5-18 exceeds that weekly threshold, then peak surcharges will take effect.
For very large items, peak surcharges will apply to FedEx Express and FedEx Ground, for packages measuring over 96 inches length-wise, or a total of 130 inches or more in length and girth.
How much are these surcharges? Here’s a breakdown:
- Oversized peak surcharges will increase from $30 to $52.50 per parcel
- FedEx Ground and FedEx Express: $1 to $5 surcharge per package based upon “Peaking Factor” calculations that take into account increases in volume as compared to pre-COVID levels
- FedEx SmartPost will see increases of $1-$2 per package, depending upon the stage of the season
Regional Carriers: What They Are, What You Need To Know, and Some New News From Shippo!
Most merchants—especially when just starting out—will opt to use at least one, or a mix of major national and international carriers such as USPS, UPS, and FedEx. These carriers are solid shipping solutions for businesses in most all locations and can deliver orders almost anywhere in the world. But for shippers who want even more flexibility and options within their carrier mix, regional carriers can often be another strong solution.
Just as the name implies, regional carriers operate within specific regions of the country. As they serve smaller geographic footprints, they often have the ability to provide:
- A higher rate of on-time deliveries
- More cost-effective prices within the region
- Highly efficient overnight and same-day delivery options
- Expanded and personalized customer service
- Specialized services within the region
We’re proud to announce new integrations with Lone Star Overnight and PCF.
Lone Star Overnight (LSO) is a regional carrier servicing Southwestern states including Texas, New Mexico, Oklahoma, and Louisiana. LSO is often seen as a more cost-effective solution than many other carriers, especially for regional overnight options.
With LSO and Shippo, users can take advantage of the following benefits:
- 40% savings on regional deliveries
- Most shipments arriving in one day
- Free, automated pickups scheduled for the next business day
And, to simplify the process and details for Shippo users, LSO will display any applicable surcharges including residential delivery and fuel fees within the total shipment price shown. And there will be no extra fees after the fact, unless the weight or dimensions exceed those entered during the label purchase. This means no more hidden fees, whatsoever.
PCF has been servicing the last-mile delivery needs throughout the Northeast for nearly 40 years—with a reach that stretches from Southern New Jersey to Southern New Hampshire.
To use PCF with Shippo, you’ll need a PCF account. If you ship within the Northeast and are interested in testing out PCF, please reach out to us at email@example.com. One of our shipping specialists can provide more details and put you in touch with PCF.
USPS: A Quick Look at Updates and Delays
One topic that keeps coming up is the subject of USPS delays. We’re here to help provide clarity, based on Shippo data for millions of shipments. The truth is, overall, that the delays are not that major. While there are upticks in transit times for longer-distance shipments and certain zones, delays for shorter-distance deliveries are mostly minor. For more detailed information on USPS delivery timing, check out our recent summary and analysis.
Other recent USPS news focuses on the proposed upcoming holiday surcharges. The surcharges were approved by the Governors of the Postal Service on August 6, 2020, and would temporarily raise prices on the following domestic commercial services:
- Priority Mail
- Priority Mail Express
- First-Class Package Service
- Parcel Select
- Parcel Return Service
As part of the announcement on August 14, 2020, the USPS opined:
“This time-limited adjustment will increase prices for our commercial customers in line with competitive practices without impacting customers at the retail level. In doing this, the Postal Service is protecting the retail consumer during a vulnerable economic period while increasing prices on commercial volume during heightened volume levels.”
Here are a few key details:
How would these surcharges be applied? The surcharges would apply to commercial shipments and vary depending upon the services selected.
What does that actually look like? It ranges from around .024 cents to $1.50 per package.
When would they kick in, and how long will they last? Surcharges would be in effect from October 18 until December 27, 2020.
Are these new charges set in stone? As of now, no. They still need to be approved by the Postal Regulatory Commission, which is expected to review soon.
You can read the full announcement here, and we’ll continue to keep you posted as things develop.
Shipping and COVID-19
And finally, we just wanted to pass along that as of its latest update on August 4, 2020, the CDC still finds that the coronavirus “is unlikely to be spread from domestic or international mail, products or packaging.”
*UPS reserves the right, it its sole and unlimited discretion, to apply Peak Surcharges to the UPS Digital Access Program or to otherwise change UPS’s pricing or terms at any time without notice.