Transportation TL;DR September 2021

Monthly updates in transportation, including carrier changes, freight news (both LTL and small parcel), plus international shipping and trade compliance regulations. 

☝️ ICYMI:

The State of the Shipping Industry: Carrier Updates, Surcharges, and 2021 Holidays 

Carrier Peak Season Surcharges  

Yes, you read that right. All the major US shipping carriers have added surcharges for peak season, on top of the surcharges they have added throughout this year. Here is a breakdown of each of the major carriers and the surcharges that will be put into effect starting October 2021.  

UPS Capacity & Growth 

The carrier predicts that holiday package volume will exceed their capacity by 5 million parcels daily. That is big. To ramp up for that they have increased peak season surcharges that are deemed “indefinite.”  

Over this summer, the average daily volume for domestic packages fell 3% YoY. This was mostly due to a lower SurePost volume (down 1.3 million packages per day). Simultaneously, Saturday Ground delivery volume grew 13% YoY in the last few months.  

Read the full list of UPS surcharges 

FedEx Rates Explained 

Very similar to last year, the FedEx services most impacted by their peak season surcharge increases include oversize, additional handling, unauthorized packages, and high-volume residential. The Ground Economy service (formerly SmartPost) will have a $3 surcharge for the Black Friday/Cyber Monday rush (from Nov 29- Dec 12).  

Read the full list of FedEx peak season surcharges 

USPS Temporary Rate Increase 

The Postal Service announced a temporary rate adjustment for many services during the 2021 holiday season. These rates will be in effect October 18 through December 27 and affect all services. The announcement stated that these rate increases are in line with competitive industry prices. Retail and international products are unaffected by these changes. 

Read the full USPS announcement 

DHL Peak Surcharges

Following the trend of the other major carriers, DHL announced additional charges during the holiday rush season. Effective October 3 through December 25, 2021, sellers can expect peak season surcharges added to all of DHL’s main shipping services.

Read the full list of DHL peak surcharges.

UPS Fuel Surcharge 

Separate from the peak season surcharges, UPS announced in July they would add fuel surcharges to UPS Ground services, effective August 16, 2021.  

Read the full UPS fuel surcharge announcement 

Domestic Delivery Times Are Close to Pre-COVID Status  

Domestic carrier speeds reached a state of pre-COVID normalcy this summer, and they appear to be steadily moving toward a more stable, predictable rate.  

When package volume surged in March of 2020 due to the pandemic stay-at-home requirements, the carriers were unable to meet their estimated delivery times (known as guaranteed delivery). Subsequently all major carriers eliminated any insurance that packages would arrive by a specific date.  

It was a positive signifier that delivery times headed back toward pre-COVID averages when the carriers reinstated guaranteed delivery in April of 2021. Since then, delivery times appear to have stabilized. Every carrier is different, but some saw transit times two or three days longer than expected during the latter half of 2020, the weeks between Thanksgiving and Christmas being the worst.  

While all carriers have announced their plan to expand their labor force during Q4 to support predicted higher volume than last year, shippers should still plan for delays and longer delivery times.  

Potential Peak Season Volume Caps  

In early December of 2020, UPS and FedEx announced shipping caps for some retailers. It was a sudden move amid the highest surge in package volumes all year, during an unprecedently high-volume year. After a year of bedlam across all aspects of the global supply chain, this change was hard for some sellers to mitigate so late in Q4.  

Because the carriers were overwhelmed with packages, and were slipping on guaranteed delivery times, they added shipping caps to spread out their support to focus on their entire network customers.  

Sellers should expect to see updates just like this during the 2021 holiday season. Since it’s predicted to be an event bigger year than 2020, there’s nothing that’s off the table.  

  • Plan for unexpected changes to occur mid-peak season. 
  • Certain regions may be affected more than others.  
  • Speak with your transportation team, your carrier(s), or your 3PL now to strategize.  
Guest Post

✅  Read more: Top trends and predictions for the 2021 holiday peak selling season.  

How Should Sellers Plan for the Holidays? 

It is very important to start planning your holiday shipping strategy now. Bottlenecks will happen, and there are always unforeseen challenges (weather!), but there are a few tactics that can help sellers get the support they need at the busiest time of year.  

  • Plan promotions and sales early to get ahead of the demand surge. 
  • Diversifying your carriers; either have a backup carrier ready to go or work with more than one to avoid volume caps if you are a high-volume shipper.  
  • Look into regional carriers—it may help you navigate around shipping bottlenecks, inclement weather, or other unforeseen issues.  
  • Communicate with your customers! Set reasonable expectations ahead of time—getting a package early is preferable than getting it late.  

Read more about how to mitigate shipping risks during the holiday season.