Wikimedia Commons, August 28, 2015
UPS just introduced “new peak charge” for those using their delivery services this holiday season. The new peak charges will be applicable during select weeks in November and December 2017. UPS claims the change will help them provide better quality services for those planning to use their services this holiday in addition to “offsetting some of the additional expenses incurred during significant volume surges”.
In order to meet holiday delivery demands this year, UPS has added on (temporarily) additional air and truck cargo capacity as well as short-term facilities and added sorting and delivery team members. The increase rates will be active from select weeks from November through December, take a look at the chart below for rate changes.
The above chart rates only apply to U.S., not including Alaska and Hawaii. To see additional rates for excluded states and more details, please visit ups.com/rates. The peak surcharge will cover most shipments during the busiest holiday shopping dates like Cyber Monday and Black Friday--an increase of $0.27 between November 19 through December 2. Those who want to avoid peak surcharge can ship items out between December 3 through the 16th as the surcharge will resume on the final week of December starting the 17th.
According to the National Retail Federation, retail e-commerce growth will increase an estimated 8-12% as online sales continue to expand. The surcharge will surely help the company better many the overwhelming volume of deliveries that flood their system in the coming months. To avoid paying shipping surcharges or late shipment, retailers highly recommend shoppers utilize their store pickup option at checkout. Nearly all department retailers offer store pickup options on their online merchandise so you’ll save on shipping and get your items faster.
What does this mean for Amazon?
A large portion Amazon packages are currently delivered via UPS but Amazon does use various other couriers like FedEx and USPS depending on the shipping method that shoppers select at checkout. The rise in rate for UPS over the holiday could mean a price hike on certain Amazon Prime eligible items. Amazon also currently offer free digital credits for those who opt for standard delivery and may work on improving this incentive to drive down shipping costs during the holiday.
According to USA Today, Amazon is working on establishing it's own shipping company. This doesn't come as a big surprise since it's more cost effective for Amazon to handle shipments internally. Despite their current partnership with UPS, Amazon will likely focus their efforts on their own shipping logistics so that they are able to increase their own capacity for delivery during busier times.