Peak Season Surcharges on the Rise

September 8, 2020


It is not just UPS and FedEx that are implementing peak season surcharges this year, it is also the USPS, LaserShip, OnTrac, Pitney Bowes and probably even more small parcel providers that have not publicly announced these surcharges.

Why this year?

This year has seen an unprecedented amount of small parcel volume as consumers ordered more goods online thanks to COVID-19 mandated store closures earlier this year. As stores reopened, however, many consumers have remained hesitant to return and have continued shopping online.

Last mile delivery networks have been, and continue, to be strained with the increased e-commerce volume resulting in FedEx and UPS announcing temporary peak Ground surcharges in May and June in addition to already announced temporary peak international surcharges. These surcharges were implemented “to manage demand”.

Holiday Season

This holiday season is being described as “one like no other” by many retailers. Sales from e-commerce are expected to surpass those from retail stores and this is creating concern that last-mile delivery providers may not be able to keep up with the demand.

The concern is real as UPS, FedEx, the USPS and even Amazon have struggled with delivery delays throughout this year and it is likely there may not be enough capacity to meet the anticipated holiday e-commerce demand.

However, some providers such as LaserShip have increased capacity just ahead of the holiday season. For example, LaserShip’s new facility in Durham, NC is a 40,000 sq. ft. facility that is able to process up to 14,000 packages per hour.

Meanwhile, FedEx issued a press release this week noting that its Ground division has increased capacity with facility investments across the network, including:

  • Six regional sortation facilities, each strategically located to serve large e-tailers in short-haul solutions
  • Four new automated stations
  • Eight new or expanded large package facilities that further enable the safe and efficient handling of items like TVs and furniture.
  • Expanding more than 50 existing facilities with additional material handling equipment and automation

But will LaserShip and FedEx additional capacity be enough? We continue to hear of delays especially FedEx deliveries.

Peak Season Surcharges

Capacity is a huge concern but are surcharges the answer? For some, yes, perhaps. But for others such as the USPS, it is a means to generate revenue. As noted in the USPS announcement, “The Governors believe these temporary rates will keep the Postal Service competitive while providing the agency with much needed revenue.”

Surcharges are confusing enough to understand but this year’s peak season surcharges are even more confusing. The number of providers that have implemented such surcharges is difficult to compare. Utilizing third-party providers such as Spend Management Experts will be critical to not only understanding the fees but also to help seek alternative solutions. And yes, there are alternative solutions.

 


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 on the Rise

September 8, 2020


It is not just UPS and FedEx that are implementing peak season surcharges this year, it is also the USPS, LaserShip, OnTrac, Pitney Bowes and probably even more small parcel providers that have not publicly announced these surcharges.

Why this year?

This year has seen an unprecedented amount of small parcel volume as consumers ordered more goods online thanks to COVID-19 mandated store closures earlier this year. As stores reopened, however, many consumers have remained hesitant to return and have continued shopping online. Last mile delivery networks have been, and continue, to be strained with the increased e-commerce volume resulting in FedEx and UPS announcing temporary peak Ground surcharges in May and June in addition to already announced temporary peak international surcharges. These surcharges were implemented “to manage demand”.

Holiday Season

This holiday season is being described as “one like no other” by many retailers. Sales from e-commerce are expected to surpass those from retail stores and this is creating concern that last-mile delivery providers may not be able to keep up with the demand. The concern is real as UPS, FedEx, the USPS and even Amazon have struggled with delivery delays throughout this year and it is likely there may not be enough capacity to meet the anticipated holiday e-commerce demand. However, some providers such as LaserShip have increased capacity just ahead of the holiday season. For example, LaserShip’s new facility in Durham, NC is a 40,000 sq. ft. facility that is able to process up to 14,000 packages per hour. Meanwhile, FedEx issued a press release this week noting that its Ground division has increased capacity with facility investments across the network, including:
  • Six regional sortation facilities, each strategically located to serve large e-tailers in short-haul solutions
  • Four new automated stations
  • Eight new or expanded large package facilities that further enable the safe and efficient handling of items like TVs and furniture.
  • Expanding more than 50 existing facilities with additional material handling equipment and automation
But will LaserShip and FedEx additional capacity be enough? We continue to hear of delays especially FedEx deliveries.

Peak Season Surcharges

Capacity is a huge concern but are surcharges the answer? For some, yes, perhaps. But for others such as the USPS, it is a means to generate revenue. As noted in the USPS announcement, “The Governors believe these temporary rates will keep the Postal Service competitive while providing the agency with much needed revenue.” Surcharges are confusing enough to understand but this year’s peak season surcharges are even more confusing. The number of providers that have implemented such surcharges is difficult to compare. Utilizing third-party providers such as Spend Management Experts will be critical to not only understanding the fees but also to help seek alternative solutions. And yes, there are alternative solutions.  

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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