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UPS Slaps Surcharge on Domestic Parcels Amid E-Commerce Surge

There’s good and bad news for shippers operating in an environment set by the coronavirus pandemic and the surge in e-commerce usage in the wake of stores closures and social distancing.

UPS began instituting peak surcharges on May 31 until further notice on certain U.S. domestic packages. A previously announced peak surcharge on certain international shipments from all origins to all destinations, including the U.S., came into effect on April 12.

UPS said it continues to provide essential service amid the ongoing coronavirus outbreak to support the needs of its customers.

“Our goal is to ensure businesses and customers are able to meet their shipping needs while demand has increased for shipping services,” UPS said.

Peak surcharges will apply to packages shipped during specified peak periods to specific origins, destinations and service levels and are in addition to all other applicable charges.

A peak surcharge will apply to shipments originating from China to the U.S. ranging from 75 cents per pound for UPS Worldwide Expedited to 79 cents per pound for UPS Worldwide Express, Express Plus and Worldwide Saver and $1.81 for Worldwide Express Freight and Express Freight Midday.

Peak surcharges are in effect to Hong Kong of 52 cents a pound for Expedited service, 57 cents per pound for Express, Express Plus and Saver, and $1.36 per pound for Express Freight and Express Fright Midday delivery.

A peak surcharge of 30 cents per pound will apply to certain UPS Ground Residential and UPS SurePost packages for all U.S. origins and destinations for qualifying customers whose combined volume of Ground, Residential and SurePost packages during the week immediately prior to the applicable invoicing period exceeded the customer’s average weekly volume from Feb. 2 through Feb. 29 by more than 25,000 packages.

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In addition, a peak surcharge of $31.45 per pound is set for qualifying customers who shipped more than 500 large packages during the week immediately prior to the applicable invoicing period for all U.S. origins and destinations. Large packages are defined as packages with length plus girth exceeding 130 inches, or with length exceeding 96 inches. Once the initial threshold for large packages has been met in any week, the peak surcharge will apply to all large package shipments at any time regardless of volume.

UPS is far from alone in dealing with skyrocketing parcel volumes.

Package Concierge, a provider of automated locker solutions, reported that it processed nearly 7 million package transactions from March 1 through May 23, a 31 percent increase year-over-year.

Package Concierge data shows its weekly average exceeding 600,000 transactions–higher than the average weekly package volume processed during the 2019 holiday shopping season.

“The influx in shipments has been consistently high since mid-March and escalating throughout May,” Donna Logback, head of marketing at Package Concierge, said. “The volume of packages we’re processing rivals the busiest shopping season of the year, reinforcing the critical importance for apartment communities to have an efficient, seamless system for managing packages.”

Package Concierge also analyzed a data set of 200 properties with 200 to 250 units for analyzing year-over-year package management trends. Transaction volume for this group was up over 24 percent for the month of April, with the number of packages per property averaging 28 per day, resulting in 200 additional packages per month compared to April 2019. The data also indicates that residents are retrieving their packages more quickly during the pandemic, averaging about 19 hours to collect a package versus 24 hours in April 2019.

“The pandemic is forcing consumers to find alternatives to obtain necessities in a way that allows them to avoid contact with others, so having a contactless solution for package management like automated lockers and package rooms is helping keep property staff and residents safer, while also adding convenience,” Logback said.

There is better news for those shipping by ocean carrier. The World Container Index (WCI) assessed by Drewry, a composite of container freight rates on eight major routes to and from the U.S., Europe and Asia decreased 1.1 percent to $1,575.97 per 40-foot container (FEU) for the week ended May 28.

The average composite index of the WCI for year-to-date was $1,599 per FEU, which was $216 higher than the five-year average of $1,383 per FEU.

Rates on most routes showed a downward trend. Spot rates on Los Angeles to Shanghai fell 6 percent or $27 and stood at $452 per FEU, while rates from Rotterdam to Shanghai saw a decline of 2 percent to reach $1,021 per FEU.

Similarly, rates on Shanghai to Rotterdam and Shanghai to Los Angeles weakened 3 percent to $1,694 per FEU and 1 percent to $1,675 per FEU, respectively. However, rates from Shanghai to New York increased 2 percent or $56 to reach $2,625 per FEU, as rates on Shanghai to Genoa, Italy, were flat at $1,910 per FEU and rates on New York to Rotterdam and Rotterdam to New York remained stable at $507 and $2,516, respectively.