Peak Season Surcharges Coming This Holiday Season

August 14, 2020


The holiday season could be a logistical nightmare for retailers. Peak season surcharges and capacity constraints could cripple retailers further as many precariously balance between survival and bankruptcy.

Substantial Peak Season Surcharges Announced

UPS is the first to announce surcharges on large shippers during the holiday season. According to UPS, “These surcharges help protect our network and ensure UPS is compensated appropriately for additional costs incurred to maintain our high-quality service.”

Perhaps. But what about the retailers?

Spend Management Expert’s CEO and founder, John Haber commented on the situation to national publications including the Wall Street Journal and Bloomberg as well as local newspaper, the Atlanta Journal-Constitution and trade publication, Logistics Management.

“It’s getting to a point where I’m starting to consider it gouging.”
- Haber commented to the Wall Street Journal about the rate hike.

Residential Deliveries Have Skyrocketed

Meanwhile, Tom Black of Bloomberg highlighted the fact that UPS, FedEx and other couriers have been hit with unprecedented residential package volume amid the pandemic. UPS’s total average U.S. volume increased 23% in the second quarter from a year earlier, and FedEx’s total U.S. ground deliveries jumped 20% in its latest quarter. Haber told Bloomberg that “the companies that are going to be hurt by these surcharges are the companies that can least afford it at this point, and that’s retailers.”

Haber continued this line of thought with the Atlanta Journal-Constitution, referencing many retailers are already “fighting for survival” and adding that “some of these costs are going to have to be passed down.”

Indeed, this year we are witnessing a record number of retail bankruptcies. According to RetailDive, 25 major retailers have filed for bankruptcy thus far in 2020. The total number for the entire year of 2019 was 17.

As for ‘free shipping,’ John Haber commented to Jeff Berman of Logistics Management:

“We always say that free shipping is not free, and, at some point, you may see free shipping go away, I am predicting. That may be the outcome in 2021, with shipping policies starting to change for consumers.”

 


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

 

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Peak Season Surcharges Coming This Holiday Season

August 14, 2020


The holiday season could be a logistical nightmare for retailers. Peak season surcharges and capacity constraints could cripple retailers further as many precariously balance between survival and bankruptcy.

Substantial Peak Season Surcharges Announced

UPS is the first to announce surcharges on large shippers during the holiday season. According to UPS, “These surcharges help protect our network and ensure UPS is compensated appropriately for additional costs incurred to maintain our high-quality service.” Perhaps. But what about the retailers? Spend Management Expert’s CEO and founder, John Haber commented on the situation to national publications including the Wall Street Journal and Bloomberg as well as local newspaper, the Atlanta Journal-Constitution and trade publication, Logistics Management.

“It’s getting to a point where I’m starting to consider it gouging.” - Haber commented to the Wall Street Journal about the rate hike.

Residential Deliveries Have Skyrocketed

Meanwhile, Tom Black of Bloomberg highlighted the fact that UPS, FedEx and other couriers have been hit with unprecedented residential package volume amid the pandemic. UPS’s total average U.S. volume increased 23% in the second quarter from a year earlier, and FedEx’s total U.S. ground deliveries jumped 20% in its latest quarter. Haber told Bloomberg that “the companies that are going to be hurt by these surcharges are the companies that can least afford it at this point, and that’s retailers.” Haber continued this line of thought with the Atlanta Journal-Constitution, referencing many retailers are already “fighting for survival” and adding that “some of these costs are going to have to be passed down.” Indeed, this year we are witnessing a record number of retail bankruptcies. According to RetailDive, 25 major retailers have filed for bankruptcy thus far in 2020. The total number for the entire year of 2019 was 17. As for ‘free shipping,’ John Haber commented to Jeff Berman of Logistics Management:
“We always say that free shipping is not free, and, at some point, you may see free shipping go away, I am predicting. That may be the outcome in 2021, with shipping policies starting to change for consumers.”
 

ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.  

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