In this episode of Parcel Perspectives, Glenn Gooding and Brett Haskins, COO of iDrive Logistics, dive into the sweeping changes set to reshape the shipping industry following the recent UPS and FedEx demand surcharge announcements. They break down how major carriers are shifting from temporary "peak season surcharges" to more permanent "demand surcharges," a response to growing e-commerce pressures and market demands. This change is critical for all shippers to understand as they prepare for future logistics and pricing strategies.
Key highlights include an expected rise in shipping costs for 2025, driven by fuel price increases and strategic changes from UPS, FedEx, and the US Postal Service. Glenn and Brett discuss the end of subsidized shipping, the impact of hyperinflation, and how brands can adjust pricing without losing their competitive edge. They also stress the importance of Q4, where efficient shipping and fulfillment are essential for customer acquisition and retention during the holiday season.
The episode offers practical tips for navigating the new demand surcharge landscape. Glenn and Brett highlight the importance of accurate demand forecasting, building strong relationships with carriers, and adopting multi-sourcing strategies to reduce reliance on a single carrier. Brett shares actionable insights on aligning operational strategies with carrier requirements, enhancing customer shopping experiences, and using expert advice to minimize the financial and operational impacts of these surcharges. This conversation equips listeners with the knowledge and tools needed to succeed in an ever-evolving shipping market.
Glenn Gooding [00:00:02]:
Keep it real with you. There's a couple constants in the small parcel market. One is there will always be a general rate increase. You can count on it. Number two, if a surcharge gets introduced into the market, it is there to stay. It will not go away. The carriers become addicted to that revenue. They have to perform with the investing community on a year over year basis, and it just doesn't go away.
Glenn Gooding [00:00:31]:
And that's what we've seen here.
Glenn Gooding [00:00:38]:
Welcome to Parcel Perspectives, the podcast dedicated to small parcel shippers. I'm Glenn Gooding, and each episode we dive into insights, best practices and strategies to help you navigate this complex, costly market. Join me as we explore ways to strengthen your long term partnerships with your chosen carrier and stay competitively aligned.
Brett Haskins [00:01:05]:
I'm Brett Haskins, COO of idrive logistics, and today we're switching things up a bit. I'm taking over as your host for this episode because we have an important topic to discuss. That topic is the demand surcharge and the impact it's going to have on shippers and e commerce businesses everywhere. And who better to answer our questions than the man himself, Glenn Gooding. Glenn, as many of you know, is a seasoned expert in logistics and has been at the forefront of helping businesses navigate these tricky waters. So today I get the pleasure of asking him some tough questions and digging into strategies shippers can use to manage these surcharges effectively. Glenn, welcome to your show.
Glenn Gooding [00:01:53]:
Thanks for having me, Brett. And in all seriousness, hey, I appreciate the company. Thanks for coming on. Let's have some fun today.
Brett Haskins [00:02:00]:
Yeah, let's do it. Let's do it. Okay, to kick things off, let's just start with the basics. Understanding the demand surcharge. What is it? What's the history of it? Why do we have it? Maybe you could shed some light on that.
Glenn Gooding [00:02:15]:
That's a loaded question, my friend. So it first entered the marketplace in 2017. It was not named demand surcharge at that time. It was named peak season surcharge. Now, some history behind that. I think there's two predominant factors that opened the door for UPS and FedEx to bring it into the marketplace. One is just this maturity and growth of the e commerce channel. As the e commerce channel continues to grow and become a more dominant percentage of total retail sales, the seasonality of the e commerce channel is more impactful to the small parcel carrier network.
Glenn Gooding [00:02:56]:
So what I would tell you is in the mid two thousand ten s and going on as this thing really began to mature, UPS and FedEx began to really get their ears pinned back operationally with regard to capacity constraints. Now, you couple that with a mix of bad weather in peak season and it can be disastrous. So 2016 was a tough peak season. Weather was tough, carrier performance was pretty tough. And so Ups and FedEx looked at this. Now, historically, they always ramp up operationally, meaning they rent and lease aircraft equipment for deliveries. They hire seasonal drivers, they hire seasonal workers. They make a massive investment in servicing.
Glenn Gooding [00:03:41]:
The surge of business that comes in. They introduced a peak season surcharge. It's a unique surcharge. It stands alone by itself. It's not layered with any others. And it was built off the fact that, hey, consumer, hey, public, we are moving massive amounts of volume. Our capacity is getting strained. We have to invest for that.
Glenn Gooding [00:04:04]:
And as a result, we feel the need to impose a this peak season surcharge. Now I'm going to stop there for a minute and now kind of keep it real with you. There's a couple constants in the small parcel market. One is there will always be a general rate increase. You can count on it. Number two, if a surcharge gets introduced into the market, it is there to stay. It will not go away. The carriers become addicted to that revenue.
Glenn Gooding [00:04:35]:
They have to perform with the investing community on a year over year basis, and it just doesn't go away. And that's what we've seen here. So let's fast forward a bit. We had a pandemic. The pandemic did some things to really fast track the evolution of the e commerce channel. Buying online became much more predominant with COVID Heck, people like my mom and dad were now ordering online.
Brett Haskins [00:05:04]:
Mine too.
Glenn Gooding [00:05:05]:
Okay. So that exacerbated this issue. It really expanded beyond the window of what we traditionally call peak season? And I think it's important for everybody to know that from a carrier perspective, peak season really encapsulates October 1, really through maybe the first or second week of January. Right? It's that surge in that Q four through that. Well, the COVID search impacted things year round. So they rebranded peak season surcharge and called it demand surcharge so they could go beyond that window. And here we have it. It is here to stay.
Glenn Gooding [00:05:43]:
It's alive and well and hard for the course. There's always increases. Lo and behold, there are increases. And there's some new aspects to it this year that haven't been there before.
Brett Haskins [00:05:55]:
I get asked all the time from the brands that we talk to, customers, everyone, what is the process for determining the amount of surcharge that gets applied to these different shipments, what are the mechanics behind the decisions that the Ups, FedEx, other carriers are making? You talked a little bit about those, but maybe you could just walk us through that process of determining the amount of surcharge just so we can get in the mind of the carrier.
Glenn Gooding [00:06:24]:
Certainly. I think for starters, it goes with how did they perform the previous year over year quarter? What was revenue? What was volume? You now have to layer on what does this quarter look like from a volume and revenue projection? Are there shortfalls? If there are shortfalls, how are they going to make it up? Case in point, real life stuff today, no surprise there's extra capacity in the carrier networks right now. Buying is down. The carriers are looking for other means to augment revenue. So if volumes down, they must hit the revenue projections. I did a recent podcast on fuel surcharges. That's a longstanding that's been around for 24, 25 years. But they continue to manipulate it, and UPS and FedEx have manipulated it again, there's an example of them manipulating things to meet revenue projections.
Glenn Gooding [00:07:22]:
Well, demand surcharge weighs into that as well. Part of that, one of the key things is where does Christmas fall on the calendar? Where does Black Friday fall and how many shopping days occur in that window? Now, in 2024, thanksgiving's on November 28, pretty late in the November calendar this year. So it's compressed the holiday buying time, that real busy time of year, Black Friday to Christmas, and where Christmas falls on the calendar from an operating day perspective in comparison to the number of shipping days available. So Ups and FedEx have determined, hey, we are going to have elevated volume levels in this compressed peak season buying timeframe. And so their messaging to the marketplace is we're going to have to more heavily invest in infrastructure and headcount this year than we did previous years based off of that. And as a result, that helps justify this position. But let's make no mistake about it. Historically, the small parcel market has not been very competitive.
Glenn Gooding [00:08:32]:
It's really been what I would call a duopoly. Now, that's changed a good bit, and that's a topic for another discussion in another time. But they still operate under that premise, under that mindset. And so, lo and behold, Ups came out with demand surcharge methodologies in July this year pretty darn early. No surprise FedEx followed suit just a couple of weeks ago. So they continue to play this game of chicken or the egg, who's going to blink first? Who's going to put it out there? But invariably they fall in line with each other. So there's an aspect of this that is nothing more than a revenue opportunity for the carrier as well. So you kind of have to balance all that, right?
Brett Haskins [00:09:15]:
If I'm a shipper and I hear the announcement, what am I looking for? What are the first assumptions I should make when I read an announcement from the carrier about demand surcharge?
Glenn Gooding [00:09:25]:
Well, how is it going to affect your specific shipping profile? What is your demand forecasting projecting over that time period? So the demand surcharge is applied differently based off of the date within q four, and it has a couple tiers now. So here's what becomes increasingly challenging. For the first time this year, both UPS and FedEx are implementing a demand surcharge that goes across the broader market. It's not just the large shippers. If my mom wants to ship a Christmas package to me and she goes to a UPS store, she's going to pay a demand surcharge this year, first time ever. And that cost will vary based off of the date range that the package is shipped. The closer you get to Christmas, the higher the amount and the modality. Is it in overnight? Is it a ground, is it something in between? Is it their economy package, UPS shorepost or FedEx ground economy? Now, in addition to that, theyre also maintaining their, lets say, call their legacy perspective on demand surcharge from 2017 and on up.
Glenn Gooding [00:10:44]:
And theyre going after the large, impactful shippers. So at any point in the holiday season, you tender more than 20,000 packages in a week to the carrier. You have tripped the switch. You're now subjected to an additional demand surcharge. And that demand surcharge will be predicated on how much above a certain baseline you fall. Now, we're getting a little deep here, but I think it's important for a shipper who's looking at this or a client or brand to look and say, how does this affect me? The carriers have almost an identical methodology. Surprise, surprise. Where they go back to June shipping activity.
Glenn Gooding [00:11:26]:
Now, anybody that follows retail sales trends and activity, June is a pretty down month on the calendar. So they use average weekly volumes for the month of June for that specific shipper. So if you trigger more than 20,000 pieces in a given week, they then that's turned on. And now they measure how much you shipped and how much more that is than your baseline weekly for June. Commensurate where you fall. You get charged an additional demand surcharge on top of that. So it's a real one two punch in today's.
Brett Haskins [00:12:05]:
World.
Glenn Gooding [00:12:05]:
And I know I mentioned fuel a little earlier, it's important to note that fuel also gets added to that so fuel will factor out. So if fuels 17%, you get the demand surcharge plus a 17% fuel surcharge on that demand surcharge. I hope that answered your question, Brett.
Brett Haskins [00:12:21]:
Yeah, the detail that youre providing is really important. I think that a lot of the shippers that are in e.com that might not be at 20,000 but approaching, do they even know about the threshold? Do they know about the June date? Do they know about these things? Are they educated? Where do they receive that education? This is information that's important so they can anticipate or forecast based on actual information rather than, oh, what happened last year. Yeah, great detail around that. I guess the next question in my mind is are there specific strategies or best practices that shippers should consider in order to minimize this impact? I dont want to say, well stay below the 20,000 threshold, you sell as much as you can. But in your mind, Glenn, having seen this, what are some of those strategies? What are some of those best practices that shippers can use?
Glenn Gooding [00:13:20]:
Its an excellent question. Actually a very, very meaty question. I think theres a variety of things that can be done. I love the word. Youre saying proactive. I think in an ideal carrier relationship model, the carriers should be providing a consultative, proactive partnership with their clients and there should be active communication on proactively what is coming in q four and work towards some operational alignment. Now ideal and real world are two entirely different things. And so what I have found in my experience is that just doesn't happen most of the time.
Glenn Gooding [00:14:01]:
So now the brand needs to take the initiative.
Brett Haskins [00:14:04]:
Yeah, I don't hear much about it either.
Glenn Gooding [00:14:06]:
The brand needs to take the initiative. I would start with make sure your demand forecasting is accurate, as accurate as you possibly can, and you really have good daily projections on what your shipping activity is going to be. Once you have that, I think it's important that you schedule a meeting with your carrier and you ask for some peak season planning time. Hey, here's what we're looking at. Given that, first of all, what do you think the impact does is going to be on the demand surcharge? And you can kind of back into that math as well if you go to the publicly available knowledge. But then how can you operationally align in a way to make your volume as it goes up less impactful to the carrier capacity network? I'll give you an example. UPS and FedEx, traditionally on a ground network operation, really operate on a five day calendar week, Monday to Friday or Sunday through Thursday or that type of activity. Now it is possible that you could collaborate with your carrier and say, I'd like to put up a weekend operation, I'd like to advance orders, I'd like to arrange for a Sunday night pickup, I'd like to give it to you so you have startup volume for your Monday operation so that it's not straining the capacity of your network.
Glenn Gooding [00:15:29]:
Those types of collaborative discussions can do a lot to mitigate the effect of this capacity rising. If you're doing that work, it opens the door now for a discussion with the carrier about mitigating the expense associated with the demand surcharge. So if you have an active partnership, if you are actively looking for ways to collaborate and make a more efficient operational alignment with the carrier that you're partnering with, that you can open the door for some collaborative, let's say negotiations or mitigation strategies. That's one viable option. Another really involves kind of managing to the carrier tariff. And I hate this one. Okay, I'm going to tell you I hate it. But invariably you can't get away from it.
Glenn Gooding [00:16:22]:
So the June methodology on baseline is not new. There might be ways for you to potentially use that methodology to your advantage. You know, maybe it's time to have a sale in June. You advance a bunch of orders at that timeframe, elevate your baseline, mitigate the exposure on the growth above that. I know I'm getting out there, but I'm letting you know there's other things that can be done. When you look at the date ranges of when these demand surcharges happen, the really hefty ones kick in Black Friday. Really, the majority of the others start at the end of October. Are there things you can do to your consumer base? Can you actively market for earlier shopping activity in Q four? Is that an option? Right again, you're now managing to a carrier tariff, and I hate that option.
Glenn Gooding [00:17:14]:
Let's talk about another real practical one. I'm a huge advocate for building contingencies in your supply chain, ensuring that you have a best in class CX for your consumer. One of the best ways you can do that is by dual or multi sourcing, not putting all your eggs in one basket with one carrier. Now there's some challenges with that, and anybody who's done it understands if you read a carrier agreement, they're laden with performance requirements and portfolio tiers or earn discounts. There's all these requirements around wanting all your business. But if you're effective at this dual source, so let's say that your volume projections are that you're going to get to an average of 30,000 shipments a week during this time frame. It's going to go 50% above the threshold for tripping this. Well, if you can go into an active dual sourcing strategy where you stay below the 20,000 with any given carrier, you can not trip that.
Glenn Gooding [00:18:14]:
And you can eliminate two, three $4 per piece out of your expense by doing so now you have to ensure that you have good seamless service with both carriers or the multiple carriers you have. Another way of doing that is looking to other carriers outside of the two nationals. Regional carriers do a nice job. Please know that regional carriers are getting on board this bandwagon as well. It's a revenue opportunity. That statement of a rising tide raises all ships. I can tell you that Ontrack just announced demand surcharges. There's no potential silver bullet here.
Glenn Gooding [00:18:49]:
It requires good hard work, analytics, planning, forecasting, good communication, good partnership, good collaboration. Frankly folks, it really opens the door to bring a qualified expert in to assist you with all this because these are really challenging waters. Right. And again, I hate to advocate for managing to a carrier agreement or to a carrier tariff. I'd much rather you focus on growing your brand and delighting your clients. So those are some initial ideas on things you can do. None of them are particularly easy for it.
Brett Haskins [00:19:26]:
Yeah, and thanks for that. You've touched on several ways to potentially lessen the impact of or avoid these charges. What factors should shippers consider when deciding whether to absorb these costs internally or transfer these costs to their customers? Thats a tricky one, right?
Glenn Gooding [00:19:50]:
Thats a super tricky one. I think for starters, you have to look to the market with whatever youre shipping, whatever product youre selling to your customers. Whats your competition doing? What will the market bear? And youre right, its really tricky. And I hate to be a bearer of bad omens coming through here, but ill just whet your appetite. Theres going to be some additional podcast topics coming down the pipeline. 2025 shapes up to be, without question, the most expensive year ever to ship. And it's really predicated on a lot of things the post office is doing. Ups, Fedex.
Glenn Gooding [00:20:29]:
The point I'm making is the day of subsidized shipping is going to probably go the way of the dodo bird. I think the market, the consumer is going to begin to have to swallow that pill. If you fold shipping costs into the retail value of what you're selling. That puts you potentially at a cost disadvantage in a very competitive and transparent marketplace online. Will Amazon do that through their prime channel with the competing product that they have? So it's a tough question to answer definitively, Brett. It's really, I think, tailored to your specific market. What you're pedaling, what you're doing, what your market base will do. What's the average order value? If your average order value is well over $200, I'd imagine the shipper or the consumer may not have a big problem paying $10 for shipping on a dollar 200 plus order.
Glenn Gooding [00:21:27]:
But if your average order value is dollar 30, that's an entirely different ballgame. Right. So you kind of have to look at things through that lens. There's no silver bullet to this. It is hard. It's tricky. And I think there's going to be a lot of disruption in the marketplace with what I call hyperinflation in the small parcel expense area in 2024 and 2025.
Brett Haskins [00:21:53]:
Yeah, this is not just tricky, this is downright difficult. If you think about the shopping cart experience. We know that one of the number one reasons for cart abandonment is shipping options. So when you're looking at pricing out your products and then providing the right shipping options to get someone to actually click the buy button and submit the payment, you've got to nail those shipping options in a way that your consumer has a great experience and it meets their expectations. Or they just go somewhere else and look for a maybe free shipping or faster shipping or something like this.
Glenn Gooding [00:22:33]:
Couldn't agree more. Brent.
Brett Haskins [00:22:34]:
Yeah. What you're saying is so important here to consider. Maybe you could tell us a little bit about how these extra costs affect the overall logistics, market and economy. You mentioned 2025 was going to be the most expensive year and that we may see some of the free shipping start to go away because of these increased costs. Tell us a little bit more about that. How are these extra costs going to affect the market?
Glenn Gooding [00:23:03]:
It's really going to pose hyperinflation. There's a multitude of things going on. Fuel surcharge, again, another podcast that I really recommend you listen to, but it's important to note that in the last three and a half years, fuel, if it remained stable in our market on a week to week basis, never changed. Fuel surcharge and expense in your supply chain has gone up over 104% in three and a half years. Wow. Wow. That's an example. You see that ups and FedEx are capitalizing messaging on this shortened holiday season based off of November 28 Thanksgiving date, average daily volume within that timeframe they're considering it's going to be very high this year.
Glenn Gooding [00:23:50]:
They're going to use that, they're going to capitalize on the revenue opportunity. That bar that they're setting in 2024 to try to meet their earnings forecast is going to be a bar they're going to have to exceed in 2025. It's coming every year, right? Louis DeJoy Postmaster General he's working real hard on this agenda, this ten year plan to bring the post office into the black. It's all undertaking when they're losing billions and billions of dollars every year. Well, what they're looking at doing now is they're looking at really making the postal aggregators, the DHL, e commerce is the upsmis, the OSM, Benny Bose has gone away already. They're attacking that. They want that volume from pickup to delivery in the USP's network, in the ground advantage network they've put up to try to compete in this space. Additionally with that, they're eliminating this less than a pound pricing per ounce price.
Glenn Gooding [00:24:50]:
So what you're going to see in 2025 is an eight ounce rate and then a 16 ounce rate. So if you are in a history or a practice of shipping blouses that weigh eleven to 13oz in a poly bag, it's not going to be available as an option for you in 2025 unless you choose ground advantage for them, which was the old first class, it goes away and you're going to potentially be billed at 16oz instead of your eleven or 13. So you have all this hyperinflationary things that are going on. And it's important when a UPS or FedEx looks at the marketplace and they want to project what they're going to do with a general rate increase. Really, the first place they look to see is what is the post office doing with their rates? That kind of sets the floor of the residential market. And then they capitalize on how to position their products accordingly. So when I read all these tea leaves and I look at all this stuff happening, what I see happening is massive increases going into the small parcel supply chain, really starting here with these demand surcharges and not letting off on the gas in January of 2025, it's just not going to go away. And so if you were used to spending $4 a package on a 13 ounce blouse in a poly bag going out, that's going to be a different equation.
Glenn Gooding [00:26:18]:
You're going to be taking 20 30% increases on that. And now that's very challenging. If you're offering free shipping on orders over dollar 50, it's really going to compress margins. So something has to give. I think the consumer is going to dictate what that is. You brought up some great points bruh. You have to delight the customer. And Q four is so critical in this retail space, right? Think about the customer acquisition cost you have out there.
Glenn Gooding [00:26:49]:
You get more traffic to your website in Q four than any other time of the year, most of those being first time buyers. If that is not a delightful experience, if the carrier doesn't perform as promised, you don't get the return customer. The lifetime value goes away. And so I think there's going to be increased emphasis on lifetime value. You're going to have to go above and beyond to retain and attract those clients to come back and make purchases in the future. A lot of pressure.
Brett Haskins [00:27:19]:
A lot of pressure. I read a statistic recently that said about 50% of a customer's experience takes place from the time they purchase the product in the shopping cart to the home delivery. So customers have high expectations about parcel delivery and about being informed of that delivery and being able to return that product. And this is a really important part of Q four and peak season you were just mentioning to retain these new customers and make them repeat buyers. And so a lot is riding on the carrier's performance and the three PL or the fulfillment warehouse that's sending this out and the software being used to make sure that all this stuff is tracked and that you can have a good return experience as well. But at the end of the day, prices going up dont help?
Glenn Gooding [00:28:19]:
No, they dont.
Brett Haskins [00:28:19]:
It just puts the squeeze on the brand to have to provide all of this in a way thats still cost effective, economical, profitable. And thats where I see potential issues is all of these inflationary pressures are killing profits. What do we do next? It's hard to say. But I guess the good thing or the silver lining in this is that there's information available, there's experts available to help a shipper navigate these waters in a way that they can be the most successful. You know, going into this with lack of information or ignorance, I think you're going to get burned. Whereas having an expert to help you in these areas could make all the difference. And we see it every day in helping all the brands that we work with set up their shopping carts so that the checkout experience and the shipping options are exactly what the customer wants. So there's no abandonment.
Brett Haskins [00:29:25]:
It's delighting the customer, like you're saying, but kind of got off on a tangent there. But tell me what you think the permanence of these surcharges are and what this looks like maybe for the next few years or going forward. What does that look like?
Glenn Gooding [00:29:43]:
Definitely permanent. I guess it's a question of when it's effective or what dates it affects. It's not lost on me. The naming convention change started. Peak season surcharge is now called demand surcharge. Demand surcharge opens it up to the interpreter. At that point, if another black swan event occurs, the door is open, the mechanism is there for the carriers to turn a demand surcharge on. If you go a little beyond just this residential component that we're talking about around traditionally commerce packages, there's a demand surcharge that's effective right now in the marketplace year round, and that's around the larger, hard to handle packages, additional handling, oversized surcharges.
Glenn Gooding [00:30:28]:
There are demand surcharges associated with those, and those ramp up massively in Q four, but they're effective. Right now here in August, they're effective. And so when you talk about the future, these things aren't going away. Demand surcharge is here to stay. I expect the demand surcharge is going to be applied from a broader spectrum on a year over year basis, going to be more punitive at times. The date ranges will expand and it's just going to be a normal part of life. And frankly, I think it's going to drive shipper behavior when you look at these things. It's going to be that much more important to, one, ensure that your relationships are best in class, that align with your products, your characteristics, your seasonality.
Glenn Gooding [00:31:20]:
But I think it's also going to push you in a way that you're going to have to duel or multi source. If you put all your eggs in one basket with one carrier, you're being held hostage to these things. And as I previously stated, you know, if you're able to pivot between two or three, you build out some redundancies in your supply chain. You ensure that if there are service issues, you could still delight your clients. But you can also potentially mute some of these demand surcharges based off of things like tripping the wire at over 20,000 packages per week and then growing above a baseline that's predetermined in Joe. These types of mechanisms aren't going away. They will change. And so you're going to have to stay nimble.
Glenn Gooding [00:32:09]:
You're going to have to stay educated. You're going to have to stay proactive. And ideally you need to be leaning into some expertise. You know, if you're outsourcing to a three Pl, that three Pl should be a very skilled operator. They should be proactive, they should be experts when it comes to transportation, and they should be advocating on your behalf, helping you grow that brand from the shopping cart to the delivery execution. If you're a larger brand and you do it on your own, very, very hard, very hard to navigate these waters with out good qualified expertise. This is not a benchmarking exercise. This is around really intimately knowing your brand and how you potentially align and get closer to your consumer.
Brett Haskins [00:32:52]:
Thanks for that, Glenn. And as we wrap up here, maybe we could summarize what we've talked about today. And I think of the brand that's going to ask the question, hey, whats the high level? What do I really need to know about the demand surcharge? What are the key issues? How should I plan for it? Glenn, if you could just take a second and summarize what youve told us into maybe a couple key points or takeaways from this podcast for these listeners, I think theyd appreciate it.
Glenn Gooding [00:33:25]:
Clay, you bet. Id be happy to demand surcharge as it applies to residential shipments or air expedited type of product around this time. Really starts effective about October 27 or October 28, contingent on which carrier you're pointing to roughly the same day, regardless of how many packages you ship, you shipping five packages out of your garage a week, you're going to get this. And if you're a massive brand, you're obviously going to be looking at this as well. That starts at about twenty five cents a package for a ground residential product. It ramps up in November 24, probably the week of Thanksgiving, to $0.50, carries through December 28, and then it wraps around into January as well. And it accounts for things like returns. Now, in addition to that, effective really October 27, if you trip that wire at 20,000 packages, you're now looking at surcharges that could range from $1.50 to over $8 per package on top of the first one I talked about.
Glenn Gooding [00:34:34]:
So those are coming. You need to know your demand forecasting and you need to be actively proactively partnering with your carrier or your three PL operator to understand how you can more efficiently align with the carrier networks or more efficiently dual source to do everything possible to mitigate your exposure to these charges.
Brett Haskins [00:34:56]:
Glenn, super helpful. I hope many of our customers brands. Others listen to this and learn some of the things that I learned today. Even I understand now why some of the strategies and tactics that companies are using to force earlier sales. I also think of Amazon prime days scattered throughout the year. There's just so many things that make sense now from a strategic point of view on how you play this game. It's kind of a cruel game, isn't it?
Glenn Gooding [00:35:31]:
It's our real life supply chain, Game of Thrones, isn't it?
Brett Haskins [00:35:34]:
It is, it is. And it's unfortunate, but it's the reality. And thank goodness we've got people like you who know the ins and outs and can educate people on the key issues, key topics and give us some good advice. So I hope this was helpful for everybody listening. Thank you Glenn. And thanks for letting me hijack your show.
Glenn Gooding [00:35:55]:
You're welcome anytime. Brett, I really had a good time.
Brett Haskins [00:35:58]:
Yeah, so did I. Appreciate it. I appreciate it, Glenn. And hey, everybody listening, if you need to have a timely, relevant discussion with Glenn, get a hold of him. You would be better off doing so, and you'll definitely benefit from that conversation. Glenn, thanks again. Thanks for having me. We'll see you later.
Brett Haskins [00:36:18]:
Next time, next time.
Glenn Gooding [00:36:19]:
Take care.
Glenn Gooding [00:36:25]:
Thanks for listening to parcel perspectives hosted.
Glenn Gooding [00:36:28]:
By me, Glenn Gooding.
Glenn Gooding [00:36:29]:
I've been in the small parcel space for 37 years, starting with a deep.
Glenn Gooding [00:36:33]:
And broad background, working for one of.
Glenn Gooding [00:36:35]:
The major carriers as an operator, operator and industrial engineer, later managing pricing at the highest level for the largest, most complex shippers in the world. Since then, I've been a national thought leader and worked to help drive strategy for clients from Fortune 50 companies to startup e commerce businesses, helping them more competitively align in this complex and expensive market. If you enjoyed the show, please subscribe and share with friends. Join us next time for more expert advice and strategies to stay ahead of the shipping game.
00:00 Understanding Demand Surcharge Impact with Expert Glenn Gooding
06:24 Performance Review: Last Year’s Results, Projections, and Revenue Adjustments
09:25 Holiday Shipping Changes: UPS and FedEx Introduce Variable Demand Surcharges
12:21 Adapting to New Regulatory Thresholds: Strategies for Shippers
14:06 Accurate Forecasting and Carrier Collaboration for Optimal Shipping
17:14 Supply Chain Resilience: The Importance of Dual Sourcing
20:29 The End of Subsidized Shipping: How Average Order Value Plays a Role
24:50 2025 Shipping Rate Increases: Preparing for Major Cost Hikes
28:19 Navigating Inflation Pressures and Protecting Profits: Expert Guidance
33:25 Residential Shipment Surcharges: New Costs Starting October 27