UPS Demand Surcharges add challenging constraints to a business’s financial and operational performance. The criteria, costs, and timing of these added fees change every year, making accurate forecasting more difficult during peak seasons.
Worse, inflated shipping costs can sap your profitability unless proactively mitigated. That means the periods where demand is highest—where you might expect to maximize revenue and growth—become your highest risk and perhaps most detrimental sales windows.
This guide explains the turbulent history of UPS Demand Surcharges, when and why they’re applied, and how shippers can mitigate the unique challenges they present.
TL;DR:
Key takeaways
UPS Demand Surcharges are added fees that apply to specific UPS shipments during high-demand periods.
Demand Surcharges vary for oversized or improperly packaged shipments, ranging from $7.75 to $495.00 per package.
Flat-rate Demand Surcharges for domestic service levels apply to all UPS SurePost, UPS Ground Residential, UPS Next Day Air, and UPS Air Residential shipments. Plus, additional Demand Surcharges apply for high-volume shippers.
What you’ll learn
The definition of UPS Demand Surcharges, when they apply, and the most recent UPS Demand Surcharge rates for different fee types and service levels.
The risks, challenges, and impacts of UPS Demand Surcharges for shippers.
How to mitigate the inflated costs and operational challenges presented by UPS Demand Surcharges.
What are UPS Demand Surcharges?
UPS Demand Surcharges are additional fees for UPS packages that are applied during periods of increased demand for UPS shipping services (aka Demand Periods). They’re an extra cost on top of any existing shipping fees and surcharges for UPS shipments.
These fees, previously known as Peak Season Surcharges, were originally designed to balance the additional costs and operational complexities associated with peak season shipping periods, such as October–December, August–September, and Chinese New Year.
However, the name was recently changed to the broader term “Demand Surcharge” to account for the reality that shipping volume spikes can occur outside peak-season windows due to external factors such as trade policy changes and global pandemics—as proven in recent years.
Unlike General Rate Increases (GRIs), Demand Surcharges are often temporary adjustments specifically designed to address the added costs and operational challenges of demand spikes.
Why does UPS add Demand Surcharges to shipments?
Demand Surcharges are designed to help UPS manage the operational and financial challenges of high-volume shipping periods.
Sudden surges in shipping volume put a strain on UPS’ shipping network, requiring greater investment in temporary operational resources—for example, hiring more drivers or leasing new equipment. These resources add increased costs and can impact delivery times and service quality. Demand Surcharges provide additional revenue that helps fund these necessary investments.
It’s worth noting that periods of high demand also provide an opportunity for UPS to improve its profitability, and Demand Surcharges may be used as an excuse to raise shipping prices for financial gain.
When do UPS Demand Surcharges apply?
In July 2024, UPS announced a significant expansion of its criteria for Demand Surcharges.
The new structure now includes higher overall rates, an extended duration for the winter peak-season period, and flat-rate surcharges applied to certain domestic services.
Current types of UPS Demand Surcharges:
- Packaging characteristics.
Packages that require special processing due to dimensions, weight, or packaging may be subject to fees known as the Additional Handling Surcharge, Large Package Surcharge, and Over Maximum Limits (OML) Surcharge. - Domestic services.
During Demand Periods, Demand Surcharges apply to UPS’ core Residential, Air, and SurePost domestic services. These include flat per-package fees and additional volume-based surcharges for high-volume shippers. - International services.
Demand Surcharges for U.S. imports and U.S. exports were largely suspended, or set to $0.00, effective September 2024. However, these are always subject to change, and shippers should stay vigilant of future fee adjustments. - Peak-within-peak spikes.
In 2024, a peak-within-peak Demand Surcharge adjustment was introduced whereby fees during the highest-volume period (late November to late December) within the winter Demand Period became significantly higher.
In some cases, multiple Demand Surcharges can apply to a single shipment.
For example, a package that meets the criteria for the Additional Handling Surcharge is also subject to the newly introduced flat per-package surcharge rate and may incur an additional volume-based surcharge and a high-volume shipper surcharge if the criteria for these fees are also met.
Impacts of UPS Demand Surcharges for shippers
For shippers—particularly high-volume shippers such as ecommerce businesses—UPS Demand Surcharges present multiple challenges that must be carefully addressed and navigated to remain profitable and competitive. Challenges include:
- Increased shipping costs.
Demand Surcharges mean you’re paying more to ship goods than you normally would outside Demand Period windows, resulting in shrunken profit margins for businesses that aren’t proactive in counterbalancing the added costs. - Budgeting and forecasting complexity.
Demand Surcharges are dynamic and change frequently, which makes it difficult to accurately predict and plan for shipping costs during UPS Demand Periods. - Operational adjustments.
To maintain consistent profit margins, businesses may need to invest time and money into becoming more operationally efficient—implementing new technologies and deploying new sales strategies for Demand Periods. - Administrative burden.
The dynamic nature of Demand Surcharges means shippers must be constantly vigilant in keeping up to date with the latest announcements and changes to various Demand Surcharge policies.
The increasing complexity, frequent criteria changes, and growing costs of Demand Surcharges mean shippers in 2025 must take a multifaceted approach to mitigate the risks and challenges of shipping during UPS Demand Periods. This mitigation requires additional labor—and therefore cost—to effectively understand and manage the impacts of current and future surcharges.
Demand Surcharge rates for 2024–2025
The most recent peak-season Demand Period where all Demand Surcharges applied was from September 29, 2024, to January 18, 2025. This included an extended period of increased costs compared to previous years.
Demand Surcharges are added on top of any existing rates. For example, the Demand Surcharge for a package shipped in October 2024 that qualified for an OML Surcharge was $425. This would have been added to the standard OML Surcharge of $1,325, bringing the total surcharge cost to $1,750 per package during Demand Periods.
Below we provide the Demand Surcharge rates for the 2024–2025 peak season.
NOTE: Demand Surcharges are subject to change, and demand periods may be extended or otherwise altered at any time. Always check the official UPS Demand Surcharges rates for the latest updates before shipping.
Large Package, Additional Handling, and Over Maximum Limit rates
Demand Surcharges based on packaging characteristics are categorized by three distinct fee types, each with their own criteria:
- Additional Handling Surcharge.
This applies to packages where the physical or dimensional weight exceeds 50 lbs, the longest side exceeds 48”, the second-longest side exceeds 30”, the length plus width exceeds 105”, the packaging is cylindrical-like, or the outer packaging is not corrugated cardboard. (The cardboard criteria may not apply to UPS-branded packaging options, although this is not explicitly stated by UPS.) - Large Package Surcharge.
This applies to packages where the length plus width exceeds 130” (domestic only) or the longest side exceeds 96” (all shipments). - Over Maximum Limits (OML) Surcharge.
This applies to domestic shipments where the physical or dimensional weight exceeds 150 lbs, the longest side exceeds 108”, or the length plus width exceeds 165”.
This table supplies the rates for Demand Surcharges related to packaging characteristics, including the peak-within-peak rates:
| Surcharge type | Demand Surcharge rate (Sep 29, 2024 to Nov 23, 2024) |
Demand Surcharge rate (Nov 24, 2024 to Dec 28, 2024) |
Demand Surcharge rate (Dec 29, 2024 to Jan 18, 2025) |
|---|---|---|---|
| Additional Handling | $7.75/package | $9.95/package | $7.75/package |
| Large Package | $84.75/package | $99.00/package | $84.75/package |
| Over Maximum Limits | $445.00/package | $495.00/package | $445.00/package |
NOTE: The Additional Handling Surcharge is not applied to shipments that also qualify for the Large Package Surcharge. However, the OML Surcharge is applied on top of any existing Large Package and Additional Handling surcharges.
Domestic services (Residential, Air, SurePost) rates
Demand Surcharges for the 2024–2025 peak season Demand Period include a dual pricing fee structure. A new flat per-package fee now applies for all domestic shipments using Residential, Air, or SurePost services—separate from the pre-existing volume-based surcharges that may also apply.
The table below reflects the rates for Demand Surcharges related to specific domestic service levels, including the peak-within-peak rates:
| Service | Demand Surcharge rate (Oct 27, 2024 to Nov 23, 2024) |
Demand Surcharge rate (Nov 24, 2024 to Dec 28, 2024) |
Demand Surcharge rate (Dec 29, 2024 to Jan 18, 2025) |
|---|---|---|---|
| UPS SurePost | $0.25/package | $0.50/package | $0.25/package |
| UPS Ground Residential | $0.25/package | $0.50/package | $0.25/package |
| UPS Next Day Air | $1.00/package | $2.00/package | $1.00/package |
| All other UPS Air Residential services | $1.00/package | $2.00/package | $1.00/package |
Volume-based rates for high-volume shipments
High-volume shippers must pay Demand Surcharges on top of any applicable service-level surcharges listed above.
High-volume shippers are categorized as customers billed for more than 20,000 total combined packages (UPS SurePost, UPS Ground Residential, or any UPS Air Residential shipments) in any given week after October 2023.
Demand Surcharges for high-volume shippers are determined by a baseline volume, specifically the average weekly volume for the applicable service for the period June 2, 2024, to June 29, 2024. If your average weekly volume for the period September 1, 2024, to September 28, 2024, is less than 80% of your June baseline, UPS will use the September baseline calculation instead.
This table shows the Demand Surcharge rates for different baseline tiers—the highest tier in a given week applies to all packages that exceed 105% for that week:
| Service | *>105% to 125% of baseline | >125% to 150% of baseline | >150% to 200% of baseline | >200% to 300% of baseline | >300% to 400% of baseline | Above 400% of baseline |
|---|---|---|---|---|---|---|
| UPS SurePost | $1.40 | $2.05 | $2.35 | $2.85 | $4.90 | $7.05 |
| UPS Ground Residential | $1.40 | $2.05 | $2.35 | $2.85 | $4.90 | $7.05 |
| UPS Next Day Air | $2.65 | $3.20 | $3.50 | $4.00 | $6.05 | $8.25 |
| All other UPS Air Residential services | $2.65 | $3.20 | $3.50 | $4.00 | $6.05 | $8.25 |
*In this instance, > indicates any value greater than the following number. So rates for the first column are 105.01% to 125%. Rates for the second column are 125.01% to 150%, and so on.
How to mitigate the challenges of UPS Demand Surcharges
Added shipping costs are the bane of economical shipping. When UPS Demand Surcharges are applied to your shipments, the total shipping cost can skyrocket—making it difficult for businesses to meet demand during peak seasons while remaining profitable.
Luckily, a few strategies can help you avoid Demand Surcharges or make up for inflated shipping costs.
Planning and forecasting
The ever-changing structure of UPS Demand Surcharges makes financial planning a nightmare for shippers. However, three tactics can improve the accuracy of your forecasts and help you budget more effectively:
- Stay informed of updates.
Keep a constant eye on the latest UPS Demand Surcharge rates to ensure accurate calculations when forecasting future shipping costs. - Analyze historical data.
Review previous shipping volumes, surcharge costs, and demand trends during peak seasons to more accurately predict the impact of future Demand Surcharges. - Segment your shipping history.
Break down your historical data by service type, shipping destination, and package size to identify which segments are most heavily impacted by Demand Surcharges.
If you manage high volumes of shipments, it pays to invest in real-time analytics software such as transportation management software, inventory management software, or shipping automation software. These solutions provide more accurate data insights and save you time on complex forecasting calculations.
Packaging optimization
Optimizing your packaging can provide cost savings that help balance the financial impact of UPS Demand Surcharges, enabling you to keep profit levels where you want them during peak seasons.
You can also prevent unnecessary surcharges related to packaging characteristics (Large Package, Additional Handling, OML) by minimizing the size and weight of your packages. In some cases, you may be able to split a package into two smaller shipments to avoid these added fees.
Carrier diversification
Relying on a single carrier—such as UPS—may not always be the most cost-effective solution. Although most carriers offer loyalty incentives for high-volume shippers, volume-based Demand Surcharges may result in losing more than you gain.
Compare peak season surcharges and general carrier rates between major carriers, such as UPS, USPS, and FedEx to see if better rates are available from another carrier.
Read More: Why Carrier Diversification is Pivotal for Peak Season
Reduce your UPS shipping rates with Red Stag Fulfillment
Carriers like UPS frequently reward high-volume shippers with better rates and discounts.
Unfortunately, it’s hard for businesses to achieve the best rates unless they’re frequently shipping large volumes of goods—which isn’t the case for many companies.
At Red Stag Fulfillment, we help omnichannel brands across the United States fulfill customer orders and keep up with growing demand. That means we’re able to leverage significant shipping volumes to negotiate better rates with major carriers—including UPS—and to pass those savings on to our customers.
We also manage the administrative challenges of staying current with the latest rate updates, added complexities, and new shipping policies, so you can enjoy the peace of mind that comes with knowing your shipping strategy is always maximized for profitability and growth.
To learn more about partnering with Red Stag Fulfillment, reach out to us today for a free consultation.
