*Updated September 28, 2022.
In anticipation of the holiday season just around the corner, businesses are already preparing for the busiest period of the year. As many have noted, there has been a dramatic increase in e-commerce sales during the course of the year, in addition to a considerable shift in the in-store vs. online retail environment. For many years, almost all carriers have imposed a Q4 surcharge to offset the bulk of deliveries they must handle during this season. Buyers and sellers have been advised again by many carriers to expect delays, longer delivery times, and a higher degree of overload during this year's peak season.
Large-scale holiday events, such as Black Friday and Cyber Monday, generate significant consumer demand - and, consequently, an increase in the need for shipping services during these events. In recent years, carriers have consistently operated at near full capacity during the fourth quarter, therefore increasing labor costs. During times of increased demand, many carriers opt to apply peak season surcharges on top of their base rates to make up for these added costs. This year, with inflation and expensive gas prices, more fulfillment services will impose surcharges to help offset the cost of transportation and operating costs. Surcharges applied during peak seasons are usually charged as a flat fee per package and are determined by the carrier you choose. Surcharge amounts will depend upon factors such as destination, priority/service level, and size/weight.
This year, we are also witnessing several companies imposing surcharges that have never before, as seasonal expenses are reaching new depths. Amazon announced a peak season fee on fulfillment services for third-party sellers from October 15 to January 14, similar to other carriers.
Who do surcharges affect?
No matter what the size and type of e-commerce shipper you are, if you are shipping through a major domestic or international carrier, peak season surcharges are almost certain to be charged. Carriers like USPS apply peak shipping surcharges to both commercial and retail domestic competitive parcels. UPS and FedEx apply surcharges to large-scale and high-volume shippers who exceed a certain number of parcels per week or ship bulk or oversized goods. Ahead of the holiday season, carriers will publish surcharges on their websites, which will allow businesses to compare rates among different providers. It’s important to remember that the cheapest rate doesn’t necessarily mean the best service. Consider researching carrier options to help your business determine which carrier will provide the most value for your enterprise.
When are surcharges implemented?
In most cases, peak season surcharges are announced by carriers six weeks before they are implemented. Although peak season surcharges may be instituted at any time, they are most commonly implemented in the run-up to the holiday season. FedEx will begin their increase on October 3rd. These surcharges will continue until January 15, 2023. UPS and USPS launched their temporary increases a day earlier on October 2nd and will stay in effect until January 22, 2023. DHL also started surcharges on October 2nd through November 12, 2022, AND additionally, December 18 through January 21, 2023.
How can businesses save money during Peak Season?
In contrast to previous years, this year's peak season surcharge has proven to be more complicated than normal due to the constant delays and shortages affecting inventory and manufacturing volumes across the globe and inflation affecting customers’ spending habits. Implementing a professional order fulfillment software, like DesktopShipper, can help businesses develop a successful and versatile shipping solution strategy that addresses peak season charges in an effective manner. By automating your processes, understanding your data, and unifying your systems, you can optimize your shipping and gain visibility into your supply chain. The DesktopShipper solution offers a robust range of features, including real-time rate shopping, that are specially designed and equipped to help you feel more in control of your shipping strategy. As a result, you can maximize revenue opportunities during the holiday season.
We are in for an unprecedented holiday season in 2022. Although the recent e-commerce spike is good news for online businesses, it also means peak season surcharges will have a greater impact on operations this year. Several carriers are not only temporarily raising prices on more delivery service types than usual, but they are also maintaining their surcharges for much longer than in previous years - some as late as January 22nd. In order to avoid any unwelcome surprises, it is important to keep a close eye on surcharges and price changes. Carriers are still attempting to understand what the pandemic will mean for their business models, just as online retailers are.