Recently, UPS announced that they will be implementing new peak season charges to be applied during selected weeks in November and December 2017 for U.S. residential, large packages, and packages that exceed maximum limits. Overall, that means that at some point during the holiday months, every residential package will be hit with price increases to enable UPS to continue to provide “best-in-class value to customers” while offsetting some of the additional expenses that generally come up during significant volume surges. According to UPS Chief Commercial Officer, Alan Gershenhorn, to meet the requirements of most of their customers during those peak times UPS “flexes its delivery network process near double the already massive regular daily volume, and that creates exceptional demands.” Meaning, in order to keep up with those peak demands, UPS acquires temporarily and at short-term premiums, additional truck and cargo capacity, temporary facilities, and additional sorting personal during the holidays. This creates greater complexity when there are larger and unconventional shapes and sizes to be added to the mix.
Here’s how residential packages will increase during peak times:
- UPS Next Day Air Residential: $.81 per package December 17-23 2017
- UPS 2nd Day/ 3rd Day Air Residential: $.97 per package December 17-23 2017
- UPS Ground Residential: $.27 per package November 19-December 2 2017 AND December 12-23 2017
- UPS SurePost: $.36 per package November 19-December 2 2017 AND December 17-23 2017
Other increases are as follows:
- Residential packages shipped from within the 48 contiguous states to Alaska, Hawaii, or Puerto Rico will increase $2.99 for all services November 19- December 2 2017 and December 17-23 2017
- Large packages surcharges (length plus girth more than 150 pounds) will increase $24.00 November 19-December 23 2017
- Over maximum limit surcharges (actual weight over 150 pounds, single side over 108 inches, or over 165 inches in length plus girth) will increase $249.00 November 19 – December 23 2017
During the 2016 holiday season, UPS’ average daily volume exceeded 30 million packages on more than half of the available shipping days. Just to compare that, on an average non-peak day, they ship more than 19 million packages. During that peak period, they hired 95,000 seasonal employees and shipped almost 5 billion packages with close to 3 million packages and documents shipped daily.
So, What About FedEx?
Since the announcement of these price increases during peak holiday seasons, FedEx has remained fairly quiet. They are yet to decide whether to add additional surcharges on their peak season packages, but they want to have higher peak shipping costs covered. Executive Vice President of FedEx, Rajesh Subramaniam claims they are “focused on ensuring that we are compensated for the investments we make to deliver outstanding service during the peak,” and will continue to consider pricing changes during the holiday season. Price increases around Black Friday and Christmas would give FedEx’s earnings an additional boost, and profits are estimated to rise as much as 14 percent in the current fiscal year.