FedEx, UPS Increase Shipping Surcharges as Pandemic Supply Chain Issues Stick Around
Both UPS and FedEx have announced additional peak surcharges as a result of the pandemic’s continued disruption of the shipping industry.
FedEx announced increased fees on Peak – Residential Delivery Charge for FedEx Express and FedEx Ground domestic; Peak Surcharges on U.S. Express Package Services, U.S. Ground Services and International Ground Services; and a Peak Surcharge on FedEx Ground Economy Package Service, all with effective dates of June 21, 2021 until further notice.
The surcharge on residential shipping will have the biggest effect on e-commerce, which spiked in popularity during the pandemic as people opted to shop from home. Within the promotional products industry, it would increase the price of drop-shipping products directly to end-users’ homes, as we saw with remote-work kits or gifts for customers.
The UPS surcharge increase affects prices of international shipments from Asian and Oceanic countries, including Hong Kong, China, Taiwan, Korea, Vietnam, Malaysia, Thailand, Indonesia, Singapore, Australia and New Zealand to the U.S.
Starting May 23, UPS increased prices for UPS Worldwide Express Plus, UPS Worldwide Saver, UPS Worldwide Expedited and UPS Worldwide Express Freight, from these countries.
Companies are trying to find a workaround, but the lack of competition in the shipping and logistics space makes it difficult.
“The lack of competitors delivering parcels in North America (90%-plus volume handled only by FedEx, UPS and [USPS]) has led to skyrocketing margins for the carriers, and out-of-control rates for shippers,” Rob Martinez, founder and co-CEO of Shipware, told Retail Dive.
This is on track with what experts hypothesized earlier this year. Shipping blockages at major ports started to ease up, but shippers anticipated continued slowdowns into the summer, as e-commerce was still the preferred method for a lot of Americans, and so many products came from Asia.
In March, we reported that some analysts expect things to return to normal in the back half of 2021, but until then, continued price increases and delays will likely be the norm.