ECommerce has been on a wild ride in 2020. Consumers turned to online shopping to stay safe during a global pandemic. Order fulfillment warehouses and eCommerce shipping carriers felt the strain of the extra volume. UPS and FedEx 2021 rates and surcharges reflect that both carriers expect to see continued high volumes in the coming year.
During the 2020 holiday rush, FedEx and UPS limited shipments, putting extra pressure on USPS. Carrier capacity issues should ease after the holidays, but don’t expect them to go away.
The best way to avoid business interruptions is to plan ahead and partner with your 3PL to limit risks. Here’s what you need to know about FedEx and UPS 2021 rates.
Overview: What’s changing in UPS and FedEx 2021 Rates
FedEx and UPS 2021 rates will go up for almost all services and package types. Additionally, carriers have added a new dimensional surcharge that may significantly affect shipping costs for mid-sized and large packages.
FedEx 2021 Rates
FedEx will increase shipping rates for most of its US and international services in 2021. In addition, FedEx 2021 rates will include a new dimensional surcharge. In addition, while holiday surcharges end January 17, FedEx peak surcharges will continue for the foreseeable future.
FedEx Express, Ground, Home Delivery, and Freight Rates for 2021
FedEx is raising the cost of shipping on most of its services in 2021. The rate increase goes into effect on January 4. The FedEx services with higher rates for 2021 include:
- Ground
- Home Delivery
- Freight
- Express
- SmartPost
The company hasn’t released a comparison between 2020 and 2021 rates to show the increase. Because the FedEx 2021 rates will vary based on shipping zones, each eCommerce company may experience different shipping cost increases. You can preview the FedEx 2021 rates and calculate the difference for your business.
Before you do that, however, it’s a good idea to consider additional handling surcharges. FedEx has made one significant change in how it calculates these surcharges that could affect your business in 2021.
FedEx Additional Handling Charges for 2021
Additional handling surcharges (AHS) from FedEx are based on dimensions, weight, and packaging. The dimension charge applies to Express and Ground packages with a measurement of more than 48 inches on the longest side and more than 30 inches on the second-longest side.
The weight charge applies to US packages that weigh more than 50 pounds and international parcels that weigh more than 70 pounds. The weight surcharge applies to actual weight, not dimensional weight.
Non-standard packages are also subject to surcharges. An AHS applies to non-stackable items and goods that aren’t shipped in corrugated cardboard boxes, among others. This list covers almost all of the things that can cause a FedEx AHS.
FedEx 2021 rates for the additional handling surcharge will be higher than they were in 2020. The AHS for packages that exceed the maximum dimensions will increase from $15 to $16 per box. Overweight packages will face a surcharge of $25.50, up from $24 in 2020. Parcels with non-standard packaging will be assessed an AHS of $14 per package, up from $13. FedEx has created a handy chart to compare its 2020 and 2021 surcharges.
New FedEx dimensional surcharge starting January 18, 2021
Beginning on January 18, 2021, FedEx will use a new metric to assess the dimensional additional handling surcharge. Packages that exceed 105 inches in length and girth will be subject to an extra charge. This surcharge applies to Express and Ground services.
To calculate length and girth, use this formula:
Length + (Height x 2) + (Width x 2) = Length and Girth
For example, if your package is 40 inches long, 20 inches tall, and 25 inches wide, here’s the length and girth calculation:
40” + (20” x 2) + (25” x 2) = 130”
Even though the longest side is less than 40 inches and the second-longest side is less than 30 inches, the box in the example has a length and girth of more than 105 inches. Therefore, it is subject to a $16 additional handling surcharge because of its dimensions. Many more packages will be subject to an AHS under FedEx’s 2021 guidelines.
Fuel surcharge
FedEx 2021 rates for Domestic Express Freight will change its fuel surcharge. The surcharge covers jet fuel costs. The new rates take effect on February 1, 2021.
Peak Surcharges
Beginning on January 18, 2021, FedEx will impose a peak oversize charge of $30 per package. This surcharge will apply to US Express and Ground shipments and International Ground Services. FedEx defines an oversized package as a box weighing 150 pounds (68kg) or under with a combined length and girth of more than 130 inches (330cm).
You can expect a $3 per package surcharge to all boxes that need additional handling. FedEx SmartPost will levy a surcharge of $0.75 on each package starting January 18, 2021.
Delivery Area Surcharges
FedEx adds a surcharge when you ship an order to specific zip codes. The list of zip codes subject to a delivery surcharge is changing in 2021.
UPS 2021 Rates
UPS has also announced a standard increase average of 4.9% for 2021 for all Ground, Air, and International services — which is on par with both 2019 & 2020 rate increases and the FedEx cost of shipping increases.
Additionally, UPS has announced Delivery Area Surcharges to certain zip codes. You can view the complete list of zip codes here.
Finally, UPS Air Freight rates for shipments within/between the U.S., Canada, and Puerto Rico will increase an average of 4.8%.
UPS Additional Handling Surcharges
UPS is charging $5 for each package that needs special handling from October 4, 2020, through January 16, 2021. Those rates will go down on January 17 to $3 per package for special handling and $31.45 for large packages.
Similar to FedEx, UPS has also redefined “large” packages to mean any package with its length plus girth measuring greater than 105 inches. UPS added length plus girth measurements to their dimensional charges, with a $15, $16, or $18 domestic fee, depending on the zone to which the package is shipping.
Learn more about the UPS additional charges here.
Peak Surcharges
UPS will reduce its peak surcharge on packages shipped from mainland China and Hong Kong. UPS 2021 rates will include a peak surcharge on US packages, starting January 17, 2021.
From November 15, 2020, through January 16, 2021, UPS will apply peak surcharges to Ground and Air residential services and SurePost. The surcharges are based on a calculation involving shipping volume compared to what was shipped in February 2020. The greater your increase in volume, the higher your per-package surcharge for shipping during the peak holiday eCommerce period. Holiday surcharges ranged from $1 to $3 per package.
Starting January 17, 2021, the UPS rate will include a flat surcharge of $0.30 to all packages sent by Ground service for residential addresses and by SurePost.
Plan ahead to manage your shipping costs in 2021
Keeping shipping costs low can be a challenge when you sell large, heavy, or bulky items. The new FedEx additional handling surcharge won’t go into effect until after most holiday packages are delivered. However, extra shipping costs could impact the cost of your holiday returns.
You don’t have to give in to higher shipping costs and DIM weight charges. There may be creative solutions to your eCommerce shipping challenges. For example, you can change carriers to get a better rate. Or work with your 3PL to change your packaging to reduce the dimensions of your box.
At Red Stag Fulfillment, we ship a high volume of heavy and bulky products, and some of our clients will be affected by the new FedEx additional handling surcharge. We will work with each of them to find the best ways to reduce their shipping costs because providing excellent customer support is core to our mission of excellence.
