Residential surcharges can make business more difficult during the holidays. Whether a company is offering free shipping to customers or charging customers for the service, the additional fees add up quickly and can impact the bottom line as well as customer orders. Shippers can rejoice that this 2019 holiday season, UPS eliminated the residential peak surcharge.
No need to throw a parade though, this UPS announcement is just for residential deliveries. Other peak surcharges are waiting for the start date to begin, and UPS is raising international air-import fuel surcharges as well. Here’s the scoop.
UPS Peak Surcharges
Look for UPS peak surcharges on contractual exceptions and those requiring special handling. These are packages that require manual processes or off-line handling.
Shippers will find UPS peak surcharges assessed on all U.S. domestic, U.S. import and U.S. export service levels for all domestic and international destinations during the peak periods, for these amounts, services and dates:
- $3.60 per package for Additional Package Handling, from November 24, 2019 to January 4, 2020
- $31.45 per package for Large Packages, from October 1, 2019 to January 4, 2020
- $250 per package for Over-Maximum Limits, from October 1, 2019 to January 4, 2020
UPS describes how these services are determined in its UPS Rate and Service Guide.
Though the UPS Rate and Service Guide will have all the details, Additional Handling basically includes these categories: weight (more than 70 pounds); length (longest side exceeding 48 inches); width (second-longest side exceeding 30 inches); packaging (not fully encased in cardboard – including cylindrical items; those routed through UPS’s irregular package sortation process; anything else UPS determines should fall into this category).
Large Package surcharges are assessed for these categories: domestic shipments where length (longest package side) plus girth [(twice the width) plus (twice the height)] equals 130 inches, or its length exceeds 96 inches; and international shipments meeting all domestic criteria except for length exceeding 96 inches.
UPS will not assess both a Large Package surcharge and an Additional Handling surcharge.
Over-Maximum limits include packages with actual weights of more than 150 pounds; exceeding 108 inches in length; or exceeding 165 inches in length (longest package side) plus girth [(twice the width) plus (twice the height.)]
Why UPS Is Eliminating Residental Peak Surcharges
As one of the major carriers, UPS again expects a record number of deliveries this 2019 holiday peak season. They’ve been revamping their facilities. UPS said they can handle 700,000 more packages each hour with their retrofitted or newly built automated sortation facilities. These Super Hubs and updated processing/delivery facilities should accommodate more than 75% of the eligible packages during the 2019 holiday season, and 100% of that eligible volume in 2021. As part of their capital investment plan, they are also upgrading air and ground capacity. During 2018 and 2019, they increased their fleet of 747-8 and 767 aircraft by 20, and there are orders for two dozen more planes to arrive by 2022.
Not surprisingly, UPS, FedEx and USPS are trying to increase their delivery speed and keep fees in check. That’s to compete against Amazon, which for the past number of years, has been disrupting not only retailing, but shipping with its Prime two day delivery (or less) model. This year, UPS also announced it was expanding its pick-up and delivery service to daily service, along with later pick-up times for next-day UPS Ground delivery, and more pick-up and drop-off partners. They added more services for lower priced international deferred shipping as well.
During the 2018 peak season, UPS applied a residential surcharge while competitor FedEx did not assess a 2018 peak season residential surcharge for the second year in a row. That said, the rates for the UPS Additional Handling surcharge, Large Package, and Over-Maximum Package surcharge are higher in 2019 than they were in 2018. These increases could more than make up for the UPS peak residential surcharges charged in 2018, at $0.28 per package for ground shipments, $.84 for Next Day Air and $0.99 per 2 Day Air shipment, especially to put them on a more level playing field with FedEx.
International Air-Import Fuel Surcharge
Speaking of surcharges, in August UPS also announced they’re increasing the Air-Import Fuel surcharge by 1% for all thresholds. They will continue to adjust them weekly, based on the surcharges for national Average U.S. Gulf Coast Jet Fuel Price.
The Air-Import Fuel surcharge ranges from 9% when jet fuel is between $1.58 and $1.61, to 12.5% when jet fuel is between $2.00 and $2.03. UPS account holders will find the fuel surcharge on their weekly bill. UPS customers who only use the service occasionally and don’t receive a weekly bill will see the addition in their charges.
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