The Coronavirus pandemic wreaked havoc throughout the shipping industry during the worst times. As people sheltered in place, they turned to more online shopping than ever, which resulted in record-breaking shipment volumes. In order to better address these issues and create more capacity in their networks, shipping carriers enacted peak surcharges. USPS even added a temporary price increase to deal with unprecedented holiday volume. Now, FedEx is imposing increases to the three of their peak service surcharges…and small businesses are set to feel the impact the most.
The Three FedEx Peak Surcharge Increases
The new FedEx surcharges only apply to Express and Ground FedEx shipments, and will take effect on June 21, 2021. The price increases will apply to the following surcharges:
- Additional handling surcharge (up to $3.50 per package, from $3)
- Residential delivery surcharge (up to $0.60 per package, from $0.30)
- Peak surcharge on Ground Economy shipments (up to $1.00 per package, from $0.75)
Oversized peak surcharges for FedEx shipments will remain the same.
Surcharges are a Part of Carriers’ Business Models
FedEx isn’t the only major carrier imposing surcharges on services recently. Over the course of the pandemic, UPS has also increased surcharges. This month (May 2021), UPS increased surcharges on international shipments heading into the United States from Hong Kong, China and Taiwan.
While these surcharges used to typically be temporary, they may now be a permanent part of carriers’ business models. Last summer, FedEx executives referred to surcharges as “the new normal.” Then, in March 2021, FedEx Chief Marketing and Communications Officer Brie Carere spoke on their importance.
“As we plan for peak of fiscal year 2022, our peak surcharges will continue to play a critical role,” she said.
The Impact on Small Business Shippers
Shipping surcharges affect businesses of all kinds that rely on sending parcels as part of their core business. However, it’s not the big corporations that feel these surcharge increases the most; it’s the small businesses. For a small business, even an increase of just a few cents on shipping costs can significantly impact margins.
As these peak surcharges take effect, small business shippers should prepare to combat them by shopping around for the lowest shipping rates available. A couple of ways to lock in lower shipping rates is to buy postage online with free online shipping software, and to opt for carriers like the US Postal Service, who aren’t imposing surcharges on residential deliveries.