Pitney Bowes Inc. (NYSE:PBI), which provides global parcel consolidation services, will impose a peak season surcharge not exceeding $1.50 per parcel on holiday traffic tendered for delivery.
The surcharge will apply to all domestic and cross-border parcel shipments covering both forward shipments and returns, the Stamford, Connecticut-based company said late Thursday. The “specific timing and rate of adjustment will be based on each client’s profile and portfolio of services,” the company said in its announcement.
A source close to Pitney Bowes said the new charges will run from Oct. 5 through Dec. 31. The source said the surcharges will replace a 50-cent per parcel charge imposed earlier this year to offset the costs of delivering far more e-commerce traffic as more consumers bought online due to the coronavirus pandemic.
The new charges will incorporate the first-ever holiday surcharges imposed by the U.S. Postal Service (USPS), according to the source. Pitney Bowes, like all large consolidators, aggregates bulk parcel volumes and tenders them to USPS for last-mile deliveries.
The surcharges are negotiable, the source said, according to a conversation with a Pitney Bowes executive. Pitney Bowes plans to undercut rivals FedEx Corp. (NYSE:FDX) and UPS Inc. (NYSE:UPS) on the surcharges, the source said.
Pitney Bowes entered the global e-commerce arena in 2017 when it acquired e-commerce and retail logistics provider Newgistics Inc. for $475 million. Pitney Bowes said its global e-commerce unit generates about $1 billion in annual revenue.
In its announcement, Pitney Bowes said customers will find the pricing changes “easy-to-understand.” Its comments were clearly directed at FedEx and UPS, both of which have published peak surcharge tables using language that parcel-delivery experts have criticized as complex and confusing. Dean Maciuba, logistics head for Logistics Trends & Insights, a consultancy, said the language was designed that way so shippers would find it difficult to comply and end up paying a fortune in surcharges.
The FedEx and UPS surcharges are based on a formula of escalating volume tiers, and are targeted at big shippers tendering large volumes over the holiday cycle. The surcharges are expected to run between $1 and $5 per parcel depending on the carrier, the service used and the volumes tendered.
In its statement, Pitney Bowes said the carriers are using “opaque rules” that make it difficult for companies to precisely calculate their shipping expenses. “This puts e-commerce merchants and shippers in the untenable position of not being able to forecast growing costs during this most critical time of year.” Pitney Bowes, by contrast, will focus on “transparency” with its surcharge programs, it said.
The 2020 peak season is expected to be the busiest in history as the normal holiday delivery surge meets the nearly yearlong increase in e-commerce activity as consumers continue to avoid stores due to concerns about contracting the coronavirus.