Ask AFS: What’s Different About This Year’s Peak Season Parcel Surcharges?

Now that peak season has officially started – and major parcel carriers have announced their Peak Surcharges – I’m having a huge sense of déjà vu. Is there anything that’s actually *different* about this year’s Peak season?

A wise woman once said that a spoonful of sugar would help the medicine go down, so let’s start with a bit of good news. This year you won’t have to deal with any newly created surcharges – or figure out how to handle Peak Surcharge increases that are in the high double digits (by percentage) for most of the existing ones.

However, you will have to contend with a smaller residential peak delivery threshold (20,000 weekly packages vs. 25,000) as well as a far more variable and confusing Peaking Factor. When we say confusing, we really mean it.

What’s changed about this year’s Peaking Factor – and what does it mean for me?

For starters, the baseline has changed. Last year it was calculated twice based on how many parcels a company shipped during two different weeks during peak season. This year it will be calculated 11 times based on the number of parcels a company shipped during peak season. For FedEx, there will also be a two-week delay between the calculation week and application week (yeah, further adding to the confusion).

The Peaking Factor pricing tiers are also more granular: both UPS and FedEx have 6 tiers (vs. four last year).  

All of these things will make it far harder for shippers like you to accurately budget – and price for – how your total parcel spend will change over the course of this year’s peak season, except of course for knowing that you’ll be spending more money this year than you did in 2021!

Any other significant differences?

Fewer shippers will win a free pass if they exceed their non-peak shipping levels. Last year’s related surcharges only started applying once companies’ weekly peak shipping volumes clocked in at 10% higher than their typical, non-peak baseline. By contrast, this year’s extra charges will kick in when companies’ shipping levels are just 5% higher. Also, the charge tiers are more granular, in other words, the same Peaking Factor will trigger a higher charge in 2022 vs. 2021.

We preferred the good news portion of your answer. 

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