Breaking Down the UPS Peak Season Surcharge for 2017

By Jason Putnam / www.shipwatchers.com / June 28th, 2017

As you may have heard from several sources including the carrier directly, UPS has indicated that there will be an additional surcharge during the 2017 Peak Season that we are calling the PSS (Peak Season Surcharge).

This is not something that comes as a shock given the predictions provided by analysts last year.  So, what exactly does this mean for shippers?  This new surcharge, as implied by the UPS Press Release, is targeting business to consumer and not commercial deliveries (with the exception of large or over-sized packages), so personal items being shipped to family members appear to be safe from this surcharge.

UPS is merely acting on the data obtained from 2016 regarding the rise in eCommerce Sales as outlined below from the US Commerce Department.  The increase in eCommerce shipments which includes a surge in residential deliveries, especially during the Holiday Season, puts stress on UPS Operations resulting in additional costs for the carrier.

Source: Internet Retailer analysis of U.S. Commerce Department figures that factors out the sales of goods not normally purchased online such as automobiles, fuel, and sales in restaurants and bars.

Peak Season Surcharges (PSS) Outlined:

Over Maximum (Domestic Only - All Service Levels)

• Including Commercial and Residential Packages
• PSS of $249.00 (November 19th through December 23rd)
• Over Maximum Limits surcharge of $110.00 is Additional
• Total Surcharge for Over Maximum Limits is $359.00

Large Packages (Domestic Only - All Service Levels)

• Including Commercial and Residential Packages
• PSS of $24.00 (November 19th through December 23rd)
• Large Package surcharge of $67.50 is Additional
• Total Surcharge for Large Package is $91.50

Residential Shipments

• Includes shipments to In Home Businesses
• Next Day Air: $0.81 per package (December 17th through December 23rd)
• 2nd Day Air and 3 Day Select: $0.97 per package (December 17th through December 23rd)
• UPS Ground: $0.27 per package (November 19th through December 2nd & December 17th through December 23rd)

Imports

• Peak Season Surcharge assessed on Imports are not yet defined and will be available on or before September 1st

As you may have realized, UPS is targeting Black Friday, Cyber Monday, and Last Minute shoppers where there is the most demand on carrier systems leaving a gap between December 2nd and December 17th.  UPS defining "home businesses" as residences is not something new and typically left up to the driver delivering the package that can make an adjustment at time of delivery with their DIAD (Electronic Delivery Device).

We are still waiting to see if FedEx will turn around and implement a similar Peak Season Surcharge.  If they don't, shippers will have leverage to negotiate these increases with UPS or work with FedEx altogether this Holiday Season.  It may also be wise to consider USPS Priority Mail albeit that they don't make any changes.  Other shippers may just pass this cost on to their customers or look for alternative ways to mitigate this increase.  Either way, it is wise to analyze your historical shipping data to pin point the impact this will have on your bottom-line and formulate a solution internally to minimize increases.

If your current logistics and/or auditing platform does not have the ability to provide valuable reporting, it is a great time to get a jump start on implementing a solution or system that does.  Auditing carrier invoices for incorrect charges and errors is just a small cog in a giant wheel of mining your shipping into an efficient process that minimize your overall transportation spend.  Being proactive any time a carrier announces an increase in rates or surcharges will have a tremendous benefit that leaves you prepared for what lies ahead.  

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