Delivering on the Holiday Challenge

Delivering on the Holiday Challenge

Most eCommerce retailers are well into their holiday peak planning. After all, securing product, developing and scheduling promotions and updating websites require well-orchestrated, advance efforts.  And with UPS’s June announcement regarding “surge pricing”, no doubt concerns have arisen around shipping cost as well as carriers’ capability to handle daily shipment volume that will exceed an estimated 60% of average.

Carriers such as UPS and FedEx plan for the peak holiday shipping season all year and with the experience of a number of years of growing online purchases, there is a good understanding of the issues and costs which arise in handling these peak volumes.  To offset these costs, we are seeing special holiday pricing being announced by both carriers.

In June, UPS announced holiday surcharge pricing that will add a 27-cent charge on all ground packages sent to homes between Nov. 19 and Dec. 2 — the weeks encapsulating Black Friday and Cyber Monday. From Dec. 17-23, UPS will charge an extra 27 cents for each ground shipment, 81 cents for next-day air and 97 cents for two- or three-day delivery.  Large package surcharges will also increase during this period, with an additional $24 fee added to an existing surcharge of $70 for a package weighing more than 150 pounds and over a certain size, as well as a peak surcharge of $249 per package on the largest packages on top of a $150 fee for such “overmax” (more than 150 pounds, or that exceed 108 inches in length or a total of 165 in length and girth combined) packages.

Although FedEx is not applying peak surcharges to typical small package holiday deliveries, they too have instituted surcharges for oversized packages. Effective Nov. 20 through Dec. 24, FedEx Express and FedEx Ground in the U.S. and Canada will increase the oversize surcharge for additional handling by $3 per package, for oversize goods by $25 per package, and for unauthorized shipments by $300 per package.

Of course, there are other carriers that handle eCommerce deliveries, including the US Postal Service as well as regional package delivery companies. At this point, there is no news about holiday pricing surcharges from these providers.

So, for eCommerce shippers, what are the implications?  Here are some questions you should answer:

  • For the typical small package shipper who uses UPS, what will the cost impact be if residential shipments continue to be sent with UPS? What about alternative delivery providers? What rates can be secured? Will the alternative prove to be reliable?
  • For eCommerce shippers with oversize products shipped with either FedEx or UPS, what will the cost impact be? What are the options? UPS wants to push these shipments to UPS Freight, but what will that cost and what is the service level?
  • If you are shipping with or are contemplating moving residential volume to FedEx SmartPost, UPS Surepost, Newgistics, DHL eCommerce or directly with the US Postal Service (which delivers most of the previous mentioned package volume) how prepared is USPS for the upcoming peak in delivery volume?

The first step is to estimate what these price increases will cost your company. Next, evaluate the cost impact of using an alternative carrier. GrandCanals can simplify this task with our Fulfillment Intelligence Cloud (FIC).

Consider, too, the likely service quality. For UPS and FedEx, service quality should be fairly consistent, but other carriers will take a bit of investigation.

Stay tuned for holiday delivery updates in the coming weeks.