As the 2024 holiday season approaches, both FedEx and UPS have unveiled their Peak Season surcharges, introducing some important changes that shippers need to be aware of. We’ll set aside the fact that both national carriers are continuing to implement charges originally intended to offset costs during times of tight capacity, even in the current environment of excess capacity. Though, that is also worth considering.
As expected, the fees have increased, but there is a different structure that could significantly impact your shipping strategy.
Starting in late September, both carriers will start the first increase of surcharges. UPS and FedEx are on the same surcharge change schedule, but FedEx has opted to start a day later, which can be helpful to shippers who ship on Saturdays.
2024 Sees a Phased Approach to Peak Season Surcharges
This year’s High Demand Season has a phased approach, with the first increase happening at the end of September. The most substantial surcharges will hit from November 24 through December 30, coinciding with the busiest shipping period of the year. Afterward, from December 31, 2024, to January 19, 2025, a period targeting holiday returns, rates will ease slightly but remain higher than pre-peak levels. The peaking percent increase starts on October 17 for UPS and October 28 for FedEx, with the baseline for a period of 27 days in the month of June 2024.
While both carriers have increased their prices proportionally to last year's high-demand season, UPS has slightly undercut FedEx during the busiest shipping period. For Oversize Charges, UPS starts off higher than FedEx by $0.25 before and after the highest increase. However, they make up for this by having a $1 advantage during the highest shipping month.
To combat the differences in Demand Surcharges, FedEx has chosen not to have additional Demand Peaking factors for Ground Economy shipments and their period for increased factors is 10 days less than UPS. This could provide a critical cost-saving opportunity, considering that FedEx Ground Economy packages is over 500% higher than UPS’s SurePost and Ground Residential options. In terms of percentage increases, UPS has increased its prices by 9% compared to last year. Meanwhile, FedEx has an average of 10% increase in peaking factors.
Peak Season 2024: Shippers Must Adapt to Higher Costs Past Peak Season
What does this mean for shippers? As the holiday season approaches, they should prepare for higher shipping costs that may persist longer than in previous years. Shippers should consider adjusting their promotional strategies, especially around peak phases, to account for these increased expenses. Only time will tell how these adjustments will play out as the holiday season unfolds. Being aware of these changes and adjusting your shipping strategy accordingly will be key to managing costs and ensuring a smooth peak season.
Your Ally for Efficient Peak Season Logistics
With shipping costs set to spike in peak season 2024, it’s more important than ever to develop effective strategies for cost-effective logistics. By leveraging Business Solutions Group’s suite of cost optimization solutions, shippers can create the visibility, resilience, and efficiency needed to succeed in a dynamic peak season.
We can see financials in a way our clients can't, enabling them to maximize end-to-end cost reductions with shippers, carriers, suppliers and vendors. As a result, we help our clients maximize cash flow, profit margins, and EBITDA.
Our mission is to inspire lasting transformations in the companies we work with so they are able to continually improve efficiencies and profitability now and long term. We have the ingredients you need to set and achieve ambitious goals.
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