As Costs Rise, UPS Adds Holiday Shipping Fees for U.S. Customers
Last minute holiday shopping might be stressful for consumers, but it's quite literally millions of times more exhausting for shipping companies. As more holiday shoppers complete their purchases online, costs for the companies that have to deliver those products—UPS, FedEx, and the U.S. Postal Service—continue to skyrocket.
Now, in an unprecedented move aimed at helping to offset some of their expenses, UPS announced it will begin charging peak surcharges for U.S. residential deliveries during the holiday season. According to a USA Today report, the charges will range from 27 cents to 97 cents per package and will be applied to individual and commercial customers shipping to U.S. residences at certain times in November and December. This is the first time that UPS has ever tacked on a "holiday shipping fee."
During the last two weeks of November—the week prior to and after Black Friday—and the week before Christmas, UPS will charge an extra 27 cents per package delivered. Additionally, from December 17 to 23, they'll add on an 81 cent surcharge for next-day air and a 97 cent fee for second- and third-day air deliveries.
Analysts throughout the industry expect that package senders will likely take on the lion's share of the raised fees. But it is expected that shoppers will pay more as ecommerce retailers look to pass those fees on via higher shipping and handling rates.
A Wall Street Journal report citing Citi Research analysis said the fees could bring in around $50 million in revenue and profit for UPS.
The raised shipping rates and talk of a holiday crunch might seem a little dramatic to the average consumer—on the surface it seems like UPS, FedEx, and USPS are complaining about having to work a little harder during the holidays. But UPS's data alone shows that, on average, they ship around 30 million packages per day during the peak holiday season. That's roughly 11 million more packages per day than during nonpeak times. That means they're processing and delivering nearly double their normal volume.
To handle the additional workload, the company has to hire seasonal employees and take on additional equipment (planes, trucks, etc.), all of which costs money. A UPS spokesperson told USA Today that they hire around 95,000 seasonal employees in each of the last two years.
Last year, UPS delivered 712 million packages between Black Friday and December 31. That was up roughly 100 million packages compared to the year prior, and nearly 300 million packages since 2010.