United Parcel Service (NYSE:UPS) has announced in a statement that it will add holiday-season surcharges on packages sent in U.S. this year. These are the first holiday-season surcharges on U.S. packages from the world’s largest package-delivery company. UPS also said that it plans to introduce a levy on large packages and items that exceed size limits during the holiday season.
For certain weeks in November and December, deliveries by the residential ground network will have an additional surcharge of 27 cents a package. The new fees start with the weeks between Nov. 19 and Dec. 2. That period includes the major Black Friday and Cyber Monday shopping occasions.
There will be no additional charges for residential ground-shipped packages during the two-week period from Dec. 3 to Dec. 16. The surcharges will begin again from December 17-23 when business picks up again due to surge in online shopping shipments. Parcels sent using next-day air will have an additional 81-cent charge in the week ending Dec. 23. Also during that week, shipments through the deferred network will have a per-package surcharge of 97 cents.
UPS said the new charges are needed to help pay for additional expenses incurred by the company during the holiday season. The company has to manage the huge surge in delivery volume during the holidays. UPS’s daily volume is roughly 30 million deliveries during the holiday season, compared to 19 million at other times of the year.
The large increases in the number of packages sent those weeks force the company to pay for additional capacity in airplanes and trucks bought at short-term premium rates, as well as paying for temporary facilities and seasonal help. UPS hired about 95,000 temporary workers during last year’s holiday season.
Chief commercial officer Alan Gershenhorn said, “With the new peak charge, per-package costs for many shipments will only marginally increase during this very busy time of the year.” Last year, UPS collected $7.97 a package, on average, on packages shipped through its U.S. ground-delivery division. Using that number as the basis, the 27 cent surcharge represents an increase of about 3.4 percent.
While the additional fees may not be a lot for the average consumer, retailers who ship out thousands of packages via UPS during the holidays will see their shipping costs increase considerably. The most heavily hit may be the online retailers who promise free ground shipping. The retailers will have to make the choice of whether to pass the additional costs onto customers or eat the surcharge as a cost of doing business.