UPS Inc. has a last-minute lump of coal for some large shippers: new delivery surcharges that take effect Jan. 16, three weeks after the company’s 2022 rate increases take effect and one day after its fees on peak-season deliveries fall away.
In a notice posted Tuesday on its website, the Atlanta-based company (NYSE: UPS) said it will impose surcharges of 30 cents per package on all domestic ground residential deliveries, and on parcels moving via its SurePost program with the U.S. Postal Service, where UPS inducts large-scale volumes deep into the postal network for last-mile deliveries to residences.
The company will also impose a $3.50-per-piece surcharge on shipments that require so-called additional handling and a $40-per-package surcharge on “large” packages that exceed 96 inches in the shipment length or 130 inches in combined length and girth. Typically, those shipments cannot be processed through UPS’ conveyor system due to their size and weight, and as a result must be manually handled. This, in turn, increases the company’s costs of providing service.
The four surcharges taking effect next month will remain until further notice, UPS said. The levies will be lower than those currently in place through the peak delivery cycle, which ends Jan. 15.
UPS will not raise its $250 surcharge on shipments exceeding the company’s maximum weight and dimensional ceilings. However, UPS is raising 2022 rates on the so-called overmax shipments, tenders the company tries to discourage, by 11.4%, so it could probably live with keeping the surcharge status quo, according to Branden Burt, director of operations for TransImpact LLC, a consultancy.
The ground residential and SurePost surcharges will be based on weekly shipping activity after February 2020, the last normal delivery period before the COVID-19 pandemic triggered massive spikes in e-commerce ordering and delivery levels. The levies will apply to shippers that tendered more than 25,000 parcels for any week since the end of February 2020, and whose combined weekly volumes exceeded 110% of the volumes tendered during any week after the 2020 period.
The additional-handling and large-package surcharges will apply to customers who have shipped more than 1,000 total packages, or more than 10 packages that fall under either of the two classifications, during any week since the 2020 period.
UPS will also impose an array of new international delivery surcharges on many U.S. import and export shipments, as well as a separate levy on all international traffic regardless of origin and destination. All of the surcharges will take effect Dec. 26 and remain until further notice, UPS said. As with the new domestic levies, the new international surcharges will be lower than those that expire on Christmas Day.
The new domestic surcharges come three weeks after the company’s 2022 across-the-board rate and surcharge adjustments take effect. For customers whose 2022 shipping budgets likely did not incorporate the costs of the Jan. 16 surcharge, UPS’ latest move may come as a shock, said Burt.
Burt said he didn’t expect UPS another series of surcharges on shippers so soon after the annual rate changes took effect. “I’m surprised by this,” he said.
A UPS spokesman said in a Wednesday email that the company continues to experience strong demand for its services and is monitoring the costs of serving its customers. The company is also managing through the uncertainties of the omicron coronavirus variant and its possible impact on ordering and delivery activity.