Analysis: Most FedEx and UPS Clients Will See a Significant Increase in Peak Season Shipping Costs Far in Excess of New Peak Season Surcharges

Most FedEx customers will pay 14% more and most UPS customers will pay 10% more this peak season than last year when the full breadth of new fees, rates and rules are considered

Reveel, whose Shipping Intelligence Platform enables companies to level the playing field with carriers, unveiled the findings of its analysis of the new peak season rules and surcharges introduced by FedEx and UPS in advance of the 2022 holiday shopping season. When combined with the significant new surcharges, fees and rules both carriers introduced last year, including the 5.9% general rate increase each introduced for 2022, the new surcharges represent but the latest development that will cause most U.S. businesses to see a dramatic increase in peak season-related shipping costs this year.

The average FedEx customer will see its peak-specific costs increase by 7% this year, but will pay 14% more for shipping this peak season than it did last year. The average UPS customer will see its peak-specific costs increase by 5.3% this year, but will pay 10% more during this year’s peak season than it did last year.

Both carriers also significantly changed the very definition of the peak season, with FedEx starting the peak season, and activating peak season surcharges, on September 5, 2022. UPS’s peak season and activation of peak season charges will commence on October 2, 2022.

Read More: NRSInsights’ September Retail Same-Store Sales Report

Reveel’s data scientists are able to provide real-world shipping cost analysis and projections by creating models that apply the carriers’ new shipping fees, rules and surcharges to millions of actual shipments customers made through the company’s platform to make projections. Reveel is able to provide an apples-to-apples comparison of shipping costs from one point in time to another.

“The real shipping costs that businesses face are determined by a complex web of numerous variables. These encompass everything from new fees, to new surcharges on everything from fuel costs to peak seasons – all impacted by a constantly changing litany of new rules on everything from parcel dimension to zones,” said Josh Dunham, co-founder and CEO of Reveel. “It is imperative for shippers to remember that an increase in any one area, whether it’s a higher peak surcharge or an annual rate increase, is in and of itself, not indicative of what their costs will be. To truly understand how shipping costs are changing you must look at the big picture and that requires data science.”

Additional findings related to FedEx’s new peak season and peak season surcharges include:

• Isolated from other costs increases, the new residential peak surcharge will by itself increase the average cost companies face during peak season by 4.5% – significantly impacting large companies that ship more than 20,000 shipments per month;
• The shipping cost of the average package affected by FedEx’s new peak surcharge will increase by $1.02; and
• Measuring by average client monthly volume, September was not a peak month – companies shipped 1% less in September of 2022 than the monthly mean for the year.

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Additional findings related to UPS’s new peak season and peak season surcharges include:

• Isolated from other costs increases, the new peak surcharges will by themselves increase companies’ peak season shipping costs by 5.3% compared to last year’s peak season; and
• The shipping cost of the average package affected by UPS’s new peak surcharge will increase by $1.00.

Notably, in December of 2021, Reveel also estimated and announced its analysis of the 5.9% general rate increase introduced by both FedEx and UPS for the 2022 calendar year. Those findings – specifically that UPS’s 5.9% general rate increase would actually amount to a 10.25% increase for most companies, and that FedEx’s 5.9% increase would actually amount to a 12.86% increase for most companies when considered in light of new surcharges, fees and rules – proved to be accurate as evidenced by earnings and reports on revenue-per-package.

“Since founding Reveel in 2006, I have never seen the carriers employ such aggressive efforts to increase their revenues, nor witnessed the barrage of largely ‘hidden’ fees introduced since the pandemic put them in a place of privilege,” added Dunham. “Even when you subscribe to the narrative that increased e-commerce volumes are difficult for carriers to address, the money grabbing we have seen over the past two years is excessive, as is the ‘take it or leave it’ approach many large shippers find themselves encountering today. In light of these challenges and the dramatic impact shipping costs now have on top-line and bottom-line results, shipping absolute should be a c-suite concern for any company that does business online.”