The holiday season, leading up to Christmas, is the most important time of the year for retailers in the US. According to the National Retail Federation, Americans are likely to spend between $755 and $767 billion in the months of November and December and in 2021 57% of holiday purchases were made online.
This puts pressure on all sectors of the supply chain. It motivates businesses to offer fast shipping and a diverse product selection. While businesses are motivated to expand, shipping carriers face higher demand than any other time of the year. Because of these forces, carriers issue peak season surcharges.
What is a peak season surcharge?
Peak season surcharges are add-on fees carriers charge to account for higher demand during certain parts of the year. All major carriers, including FedEx, USPS, UPS, Amazon, and regional carriers, have at least one “peak” season during the year when these fees are added.
The amount added to a shipper’s bill depends on the carrier, the type and size of parcels being shipped, and the time of year. These surcharges range from as little as twenty-five cents for envelopes all the way to $1,025 for pallets. The dates these surcharges are in effect typically fall between early October and December, with some carriers tacking on an additional peak season surcharge between June and September. With increased shipping costs for up to more than half the year, it’s never been more important for shippers to understand what peak season surcharges are and how to get through these costly seasons.
Strategies for success
Point blank, there’s no way to completely avoid these charges. For businesses to stay competitive during the holiday season, they must ship their products, incurring these charges along the way. There are, however, steps businesses can take to meet the seasonal demands of consumers and not totally damage their bottom line.
The first and most important step a business can take is to prepare for these surcharges. Knowing when these surcharges begin and end and how your business’ specific parcels will be affected is vital to creating a strategy to adapt to them. One of the ways to optimize your business is to analyze which shipping zone you are moving across. Partnering with distribution centers is an exceptionally effective way to lower shipping costs, generally. For example, if your business is in Massachusetts but most of your shipments are going to the west coast, it is likely advantageous to move inventory to a distribution center closer to the west coast. A smaller scale change businesses can make is to optimize your packaging. As the peak season surcharge often affects different weights and sizes of parcels in different ways, simply shrinking or removing weight from your parcels packaging can have a drastic effect.
In addition to internal changes, a business can create a relationship with an experienced logistics provider. Some providers can offer benefits to businesses via value added partnerships, sometimes including advice on creating a custom carrier agreement. Logistics providers can help businesses optimize their shipping procedures and create new plans to find the shipping solutions that will best serve your bottom line.
Peak season surcharges for UPS, FedEx, and USPS begin on October 3rd. So, shippers don’t have long to prepare!
Understanding what the peak season surcharge is, when it goes into effect, how your business will be impacted, and implementing solutions to control the impact of the charges is vital as we enter the holiday season. If you would like to learn more about how iDrive Logistics can help you, contact us here on LinkedIn!