UPS has announced a new peak charge applicable during selected weeks in November and December for U.S. residential, large packages and packages over maximum limits. The new charge, according to UPS, is designed to enable the logistics provider to continue providing best-in-class value to customers while offsetting some of the additional expenses incurred during significant volume surges.
“We’re focused on helping our customers achieve success during some of their most important selling seasons,” said Alan Gershenhorn, UPS chief commercial officer. “To meet their requirements, UPS flexes its delivery network to process near double our already massive regular daily volume, and that creates exceptional demands.”
To meet peak volume demand, among many other investments, UPS acquires additional air and truck cargo capacity, temporary facilities, and additional sorting and delivery personnel on a temporary basis and often at shorter-term premium rates.
Shipments that are larger, heavier or have unconventional shapes or sizes create even greater operational complexity during high-demand periods.
“Our goal is to help every customer obtain the delivery capacity they need, combined with predictable and timely service they count on from UPS, even when there is limited capacity in the UPS network.” Gershenhorn said.
(Read more on UPS business services and how they’re helping today’s startups: The Chain That Binds for Small Business)
Some analysts expected rival FedEx to also create some peak rates, with shipping volumes rising thanks to e-commerce purchasing increases.
The company’s new per-piece peak charge for the U.S. 48 contiguous states and intrastate Alaska and Hawaii for applicable package types and periods, ranges from an additional 27 cents for Ground Residential from Nov. 19 to Dec. 2, and Dec. 17 to 23, to 97 cents for 2nd Day Air Residential and 3 Day Select Residential the week of Dec. 17 to 23.
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“With the new peak charge, per-package costs for many shipments will only marginally increase during this very busy time of the year.” Gershenhorn added.
For example, a five-pound UPS Next Day Air package shipped from Atlanta to a residential address in Philadelphia will increase roughly 1 percent compared to non-peak shipping times. A similar package shipped to a commercial address would experience no additional cost.
From Nov. 19 through Dec. 23, UPS will also apply peak surcharges to Large Packages and packages that exceed maximum size limits. These charges are in addition to normal surcharges applicable to such packages. When shipping packages that exceed UPS’s published maximum size limits, customers are encouraged to consider using UPS Freight.
In addition, UPS will apply a peak surcharge on specific international air shipping lanes during certain periods of the year.
During the 2016 holiday season, the company’s average daily volume exceeded 30 million packages on more than half of the available shipping days. In contrast, on an average non-peak day, the company ships more than 19 million packages.
UPS hired roughly 95,000 seasonal employees during the 2016 peak shipping period. Throughout all of 2016, the company shipped nearly 5 billion packages, with almost 3 million packages and documents shipped every day by the company’s airline. Close to 3 percent of global GDP and 6 percent of U.S. GDP flows through the UPS network every day.