With the 2022 UPS peak surcharges published, all three major carriers have announced their holiday plans. We’re seeing a focus on heavy parcels and shippers with high volumes. Home deliveries are in the crosshairs, but that doesn’t mean your profitability has to be threatened. Take this as a wake-up call to update forecasts and wrap up your year-end planning.
Let’s look a little closer at the announcement from UPS.
Per-package surcharge increases for large packages
Red Stag partners will want to know that UPS is increasing its fee structure for handling and for larger items. If your shipments incur additional handling charges, these rise from $3.50 to $6.50 per package starting on Oct. 2. The large package surcharge rises from $40 to $70 at that same time. UPS is also introducing a stiff charge for parcels over its maximum limits. These 2022 UPS peak surcharge will likely impact your bottom line the most.
Knowing the changes can help you adjust margins, costs, and other budget line items or metrics to help you evaluate your year-end success. Here is a little more detail on when the new fees will apply to any given order or shipment.
According to its website, UPS applies the additional handling fees when packages meet criteria including:
- The longest side exceeds 48 inches, or the second-longest side exceeds 30 inches
- A shipment where the average weight per package is greater than 50 pounds
- Packages over 50 pounds with the weight not specified on the source document or not provided in the UPS automated shipping system
The 2022 UPS peak surcharges aren’t changing the criteria of the fee, just its cost.
Large package surcharge
The large package surcharge applies when:
- Package length (longest side of the package) plus girth [(2 x width) + (2 x height)] combined exceeds 130 inches
- Package length exceeds 96 inches
When using services other than UPS Ground for freight, large packages will have a minimum billable weight of 90 pounds. Though, UPS doesn’t charge the additional handling fee if the large package surcharge is applied.
You’re considered over the maximum limits if:
- Packages are more than 150 pounds
- Packages are more than 165 inches in length and girth combined
- Packages are more than 108 inches in length
- Or if your package has a “large size-to-weight ratio requir[ing] special pricing and dimensional weight calculations”
UPS’ actions seem very targeted at trying to reduce or eliminate the number of parcels over maximum limits that it transports this holiday season.
High-volume fees in 2022 UPS peak surcharges
Also notable in the 2022 UPS peak surcharges list is a “Peak/Demand Surcharge” applied to some shipments for customers that move more than 20,000 packages in any week when you exceed your baseline shipping volume. This fee will be applied on a weekly basis and ranges from $1.25 per package to $7.00 per package. This structure is important to note because UPS will base fees on volume and service use. The fee schedule impacts Ground Residential, Air Residential, and SurePost.
The baseline is your average weekly volume from June 5 through July 2 for the specific shipping service. However, UPS may shift and use a baseline covering the dates of Sept. 4 to Oct. 2 if that is less than 80% of the volume in that June-to-July timeframe.
These charges are higher than last year and happen sooner (requiring more than 25,000 parcels in a week back in 2021). If you’re worried about hitting these levels and facing that higher cost, it’s time to start preparing for peak season by working with your partners.
For companies working with a 3PL like Red Stag, it’s important to note that these calculations are based on the 3PL’s volume. It’s a good idea to contact your fulfillment partner to learn more about fees, volume, and their negotiations with UPS and other contractors.
Responding to the 2022 UPS peak surcharges
The 2022 UPS peak surcharges follow moves from FedEx and USPS that the industry generally expected. The best move for brands like yours is to work with your fulfillment partner to review the fees and ensure you’re picking the best services for your packages.
Red Stag Fulfillment’s experts can support your efforts to find the best price and speed for your shipments. If your shoppers are willing to pay more or wait a little longer, there may be options you can use to protect your margins. Also, providing us with up-to-date sales projections for the last quarter of 2022 helps us get the capacity you need. While carriers are telling us that they expect 2022 to face fewer crunches, our goal is to continue to talk with them regularly to secure the trailer space you and other businesses will need as your sales grow on Black Friday and beyond.