UPS announces additional COVID-19-based peak surcharges

By Jeff Berman, Group News Editor · August 7, 2020

As the level of COVID-19-related e-commerce activity continues to head in one direction—up—so, too, do peak surcharges for the shipping of orders made online. That was seen today, with Atlanta-based global freight transportation and logistics bellwether UPS announcing today it is implementing a new set of peak surcharges.

This is not the first time UPS has issued a COVID-19-based peak surcharge in recent months. In late May, it announced that it would implement peak surcharges that went into effect on May 31, for certain international shipments from all origins to all destinations, including the U.S.

And it added at the time that the Peak Surcharges applied to certain international shipments will continue to apply. Peak surcharges are subject to change and Peak Periods may be extended or otherwise changed.”

The company added that Peak Surcharges would apply to packages shipped during the specified Peak Periods for the origins, destinations, and service levels, adding that they apply in addition to all other applicable charges.

The new peak surcharges will be particularly painful for larger shippers, based on a UPS customer advisory issued today.

UPS said a peak surcharge will be applied to certain UPS Air Residential, UPS Ground Residential, and UPS SurePost packages, “for all UPS origins and destinations, for qualifying customers who, at any point during the Peak Period, ship more than 25,000 packages per week.” These peak surcharges will be in effect from November 15, 2020 through January 16, 2001.

For UPS SurePost and UPS Ground Residential these charges range from $1 per package (for 110% to 200% of February volume, $2 per package for 200% to 300% of February volume, and $3 per package for 300% or more of February volume. And for UPS Next Day Air Residential and All Other UPS Air Residential, these charges range from $2 per package (for 110% to 200% of February volume, $3 per package for 200% to 300% of February volume, and $4 per package for 300% or more of February volume.

UPS added that there will also be a peak surcharge applied to “large packages that are over maximum limits and also packages that require additional handling, for qualifying customers who at any point during the Peak Period ship more than 1,000 packages

per week or ship more than 10 packages per week that otherwise qualify for any of these Peak Surcharges” and will apply to all U.S. domestic, U.S. import, and U.S. export shipments, for all origins and destinations, in the amounts set forth during the specified Peak Period.”

These peak surcharges will take effect from October 4, 2020 through January 16, 2021 and are comprised of: an additional handling charge of $5 per package; $50 per package for large package; and $250 per package for over maximum limits.

UPS officials were unavailable for comment on these peak surcharge increases.

But when the company announced its previous peak surcharges in May, a company spokesman told LM that UPS routinely adjusts its commercial terms to reflect changing market conditions, the costs it incurs to serve customers and other factors.

“The Peak Surcharges reflect the current dynamic market conditions and uncertainties caused by the Coronavirus, which is impacting available capacity and market demand,” he said. “These surcharges are designed to balance our network to provide the best possible service for all customers, and have been constructed based on our customers’ unique package volume characteristics.”

Trevor Outman, co-founder and CEO of San Diego-based parcel consultancy Shipware said that these peak surcharges point to how, unfortunately, there is no relief for shippers and the Covid-related surcharges will continue until Peak Season surcharges kick in.

“Last year the peak season surcharges ended on January 4, however, this year they will apply through January 16th of next year,” he noted. The Additional Handling Surcharge increase is aggressive this year since it only takes 10 packages in a week to qualify. Companies that ship heavy or larger products should be warned as this increase will significantly cut in to their critical Q4 margins.”

And John Haber, Founder and CEO, for Atlanta-based Spend Management Experts, observed that these peak surcharges agreed with Outman, in that they will result in significantly higher costs for large shippers, especially for the large package and additional handling surcharges.

“This will be hard on budgets for retailers, and they are the ones struggling to stay alive, said Haber. “This will be coming down to consumers, too, there is no way it can’t. We always say that free shipping is not free, and, at some point, you may see free shipping go away, I am predicting. That may be the outcome in 2021, with shipping policies starting to change for consumers.”

August 7, 2020