Peak season is a pivotal time for ecommerce and retail businesses, marked by heightened demand and increased shipping volumes. While this period offers growth potential, it also presents unique challenges related to shipping costs.
As demand surges, carriers implement peak season surcharges to manage operational strain, covering costs associated with added resources and logistics. These seasonal fees can quickly add up for brands, making it essential to understand, plan for and manage the added costs effectively.
The following sections will explore peak season surcharges, how carrier price structuring works and strategies for minimizing the associated expenses.
Peak season surcharges are temporary fees that carriers impose during high-demand periods. These added costs help carriers manage the operational strain associated with increased shipping volumes, such as hiring seasonal staff, adjusting logistics and managing last-mile deliveries.
From late fall through the holidays, surcharges are especially prevalent as companies like FedEx, UPS and USPS prepare for increased demand.
For retail businesses, peak season surcharges mean higher shipping costs for each package, impacting the bottom line. While these fees help carriers provide consistent service during peak times, companies must prepare ahead of time to navigate these charges and maintain profitability.
Carrier pricing is a complex process influenced by various factors, each affecting the final cost of shipping a package. Here’s a closer look at the key elements that determine these prices:
Beyond base shipping rates, carriers often apply multiple additional charges to account for factors that increase shipping complexity or costs. These fees can significantly impact a business's total shipping expenses, making it essential to understand the fees that may apply during peak season.
Below are some of the most common peak season charges:
Major carriers approach peak season surcharges differently, each with unique pricing structures that can affect businesses in various ways. Below is a closer look at how top carriers are structuring their fees in 2024.
| FedEx | UPS | USPS |
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For 2024, FedEx has structured its peak season surcharges across several delivery types, adjusting fees depending on package characteristics and shipping volume. Residential Ground and Home Delivery shipments will incur surcharges between $0.30 and $0.55 per package, while Ground Economy services face higher fees, ranging from $1.90 to $3.15. Additionally, for larger volume shippers, FedEx has implemented a new "demand surcharge" of $1.45 to $8.25 per package for various express services like Priority Overnight, based on deviation from typical shipping volume levels during peak times. |
UPS's peak season surcharge structure mirrors FedEx in some ways but has also introduced significant charges for oversized packages. The Large Package Surcharge, applied to oversized shipments, ranges from $84.75 to $99. Packages exceeding specific maximum dimensions also face a surcharge between $445 and $495. Businesses could also experience demand surcharges from $0.25 to $2 for standard ground and air residential shipments, with rates scaling up based on weekly shipping volumes.
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Unlike FedEx and UPS, USPS generally applies fewer peak season surcharges, focusing instead on smaller adjustments for high-volume packages. USPS reinstated its peak season rate increases after a pause in 2023, with fees targeted primarily at higher-volume ground shipments. Below are the expected price increases for different delivery options:
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Peak season surcharges can significantly impact overall shipping costs, especially for companies handling large volumes of deliveries. For many businesses, these fees strain the shipping budget, which can erode profit margins if not planned for.
To prevent a negative impact on the bottom line, brands should budget for surcharges early in the year and work to anticipate the costs associated with increased shipping demand.
Comparing carrier prices is essential for keeping shipping costs manageable during peak season. By leveraging advanced logistics technology, businesses can make smarter choices regarding carrier selection.
Transportation management system software centralizes all shipping data and tools in one platform, enabling businesses to streamline the comparison of carrier prices, optimize shipping strategies and manage seasonal surcharges more effectively. For businesses navigating the complexities of peak season logistics, a transportation management system like Cart.com's Constellation TMS is essential.
Constellation ensures businesses can make data-driven decisions and select the most cost-effective carriers without compromising service levels with features such as:
During peak season, this level of control over shipping operations can help businesses maintain budget flexibility and avoid unexpected charges.
Choosing the right transportation management system software can significantly impact a business’s ability to manage logistics costs, especially during peak season when shipping demands and surcharges are at their highest.
Below are the key features to prioritize when evaluating a TMS for peak season success:
Organizations should focus on minimizing costs during peak season through a multi-faceted approach. To manage fees effectively, businesses should consider implementing the strategies listed below.
Peak season surcharges are inevitable, but organizations can manage these costs efficiently with the right tools. Cart.com's Constellation TMS provides a robust platform that simplifies carrier price comparisons, budget planning and logistics optimization. We’ve saved brands up to 40% on shipping. With access to centralized data and dynamic rate shopping capabilities, organizations can use Constellation to make cost-effective decisions during the peak season. Contact us today for a free demo.