UPS Levies More ‘Demand Surcharges’ Ahead of Holiday Volume Surge
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After a tough second quarter which saw many customers trade down to less profitable shipping alternatives, UPS is upping the ante on its demand surcharges.
The parcel delivery giant established the new set of fees July 15, two months earlier than last year when the company revealed the surcharges in September.
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Fees for larger packages and parcels that require additional handling will kick in on Sept. 29, before escalating even further on Nov. 24.
While these surcharges reached $74.90 per larger package and $6.90 per hard-to-handle package last year, the first set of fees will accelerate further this September to $84.75 and $7.75 per package, respectively. In late November, these extra fees jump again to a respective $99 and $9.95 per package.
Demand surcharges will take effect across UPS Ground Residential, Air and SurePost packages on Oct. 27 before jumping up again on Nov. 24. SurePost and Ground Residential start at 25 cents per package in October before leaping to 50 cents per package a month later. Parcels via UPS Air will draw an extra $1 fee, and then increase to $2 per package in November.
An additional demand surcharge will apply to certain UPS Air, Ground Residential and SurePost packages for customers who were billed for more than 20,000 packages during any week following October 2023.
All demand surcharges will be effective until Jan. 18.
FedEx has not unveiled its demand surcharges yet. The UPS rival first used the “demand surcharges” terminology last year when it unveiled them last August as a way to establish that the company would implement the added hikes beyond the holiday season.
In the UPS earnings call earlier this month, one analyst said he was “surprised” by the magnitude of the surcharges, particularly on the grounds that “it doesn’t feel like there’s a lot of pricing power right now.”
Carol Tomé, CEO of UPS, attributed the surging demand surcharges to the condensed holiday season, which she noted only had 17 days between Thanksgiving and Christmas.
“As we look at the volume projections for peak, we are expecting on our peak day, which is December 18, as the highest volume ever in our network,” Tomé said. “When you have that kind of volume flowing to your network, you actually have to charge to service them well, because you have to hire people and lease aircraft and delivery vehicles. We think that the prices are going to stick because of what the environment is telling us from a demand perspective.”