UPS and FedEx have announced their peak season surcharge (PSS) rates for the 2018 holiday season. The holidays are undoubtedly the busiest season for carriers which causes carriers to implement peak surcharges in an effort to offset their escalating expenses and increase revenue. Shippers are forced to shoulder the carriers’ extra costs of hiring additional employees, increasing fleet, and combating overwhelming operating costs.
How do discounts on surcharges impact peak surcharge rates? Let’s first take a look at the difference between UPS and FedEx peak surcharges for 2018 and then how discounts are applied to these surcharges.
UPS and FedEx peak season surcharge rates for 2018
|Peak Season Surcharge||UPS 2018 rates||Effective Dates||FedEx 2018 rates||Effective Dates|
|Next Day Residential||$0.84 per package||Dec. 16, 2018–Dec. 22, 2018||No peak surcharge||N/A|
|2nd and 3rd Day Residential||$0.99 per package||Dec. 16, 2018–Dec. 22, 2018||No peak surcharge||N/A|
UPS® Ground with Freight Pricing
|$0.28 per package||Nov. 18, 2018–Dec. 1, 2018
||No peak surcharge||N/A|
|SurePost/SmartPost Residential||$0.39 per package||Dec. 16, 2018–Dec. 22, 2018||No peak surcharge||N/A|
|Additional Handling||$3.15 per package||Nov. 18, 2018–Dec. 22, 2018
|$3.20 per package||Nov. 19, 2018–Dec. 24, 2018|
|Ground Unauthorized||$165 per package||Nov. 18, 2018–Dec. 22, 2018||$150 per package||Nov. 19, 2018–Dec. 24, 2018|
|Large/Oversized||$26.20 per package||Nov. 18, 2018–Dec. 22, 2018||$27.50 per package||Nov. 19, 2018–Dec. 24, 2018|
2018 Residential Peak Surcharge for UPS and FedEx
Residential shipments are booming due to heavy online shopping which reduces traffic to brick-and-mortar stores. This means more business for FedEx and UPS, but residential shipments are a major pain for carriers as they are forced to fragment their routes to reach individual homes. This becomes detrimental to their profits and creates inefficient delivery operations.
FedEx and UPS differ in the residential surcharge area. In dramatic contrast to UPS, FedEx is not adding additional residential peak surcharges, except when shipments are oversized, unauthorized or require additional handling. Small businesses that ship with UPS may benefit by moving for their shipping operations to FedEx to avoid residential surcharges.
2018 FedEx peak season surcharge discounts
FedEx surcharge discounts are applied to additional peak season surcharges (PSS). For example, if a shipper has a 40% discount on additional handling surcharge, this shipper will receive a 40% discount on the peak season surcharge for the additional handling surcharge.
How to calculate FedEx discount on peak season surcharge
FedEx, normally applies discounts to surcharges. The surcharge rate is lowered by your negotiated discount, similar to what’s applied to your base rate. If a 40% discount has been negotiated on the additional handling surcharge, you can calculate your new peak season surcharge rate using the calculation below as an example.
Additional Handling Peak Season Surcharge example:
In the case of FedEx, the 40% discount used in the example would be applied to both cost components billed on that given invoice related to AHS, the regular surcharge of $20 and the peak season surcharge of $3.20. Remember, the effective dates for the FedEx Additional Handling Peak Surcharge are Nov. 19, 2018–Dec. 24, 2018.
Read more: FedEx shares 2018 holiday surcharges
2018 UPS peak season surcharge discounts
UPS is notorious for not extending discounts to peak season surcharges. UPS is more focused on amassing revenue than helping its customers during the holidays. The shipping giant handles peak season surcharges (PSS) as unique cost components. Since contract terms are only for one year, the UPS customer must ask for discounts on peak season surcharges annually. Peak season surcharge discounts can be negotiated with new contract language or an addendum to your current carrier agreement. If a 20% discount has been negotiated on oversized packages during the holidays, you can calculate your new peak season surcharge rate using the example calculation below.
Get the carrier discounts you deserve this holiday season
Don’t let peak season surcharges take your business under. Manage FedEx and UPS peak season surcharges with the help of Share a Refund. Whether you ship with FedEx or UPS, Share a Refund Contract Optimization Team has years of experience analyzing and negotiating contracts that favor the shipper and secure the best rates possible. Each carrier has different rules on how discounts are applied to surcharges and your agreement with FedEx or UPS will expose how these surcharge rates will impact you on an individual level. Don’t enter the peak shipping season without having experts review your current carrier agreement for improvements that will protect your bottom line.