This article originally appeared in the January/February, 2018 issue of PARCEL
The booming trend of e-commerce shopping continues to grow, and not just in massive sales, but also in the actual size of products available. Sales of non-traditional, bulky items are now accessible from a variety of online retailers. Furniture, fitness equipment, home appliances, mattresses, and other goods once bought and delivered by local stores can now be purchased online with delivery executed by parcel carriers. As these large, often residential, packages bog down the FedEx and UPS networks, routes, and truck space, a battle by the carriers has slowly been waged to combat these burdensome items. Both carriers have responded with a concerted effort to prevent large parcel shipments from entering their networks by putting a premium on the delivery of these packages. What started out as just seasonal measures for peak shipping are trending towards the norm for 2018 and beyond.
The fight against oversize packages has grown to include not just the introduction of substantial surcharges but also an increasingly broad definition of what falls into this category. While the rate increases grab much of the headlines, it is perhaps the latter categorical changes that have subtly impacted shippers of medium- and large-sized products. These recent changes have primarily come in two forms. The first is the reduction of dimensional factors that place an emphasis on billing packages based on the size and space a package consumes on a truck, rather than actual weight. The second is another reduction, this time in the qualifying sizes for Additional Handling and Large or Oversize Package surcharges. Following UPS’s 2017 lead, FedEx has matched the Additional Handling minimum length which will now apply to any package “48 inches along its longest side” in 2018. This was previously set to 60 inches in length for UPS (2016) and FedEx (2017).
As is regularly the case with FedEx and UPS, they are again in lockstep with re-defining their respective Oversize or Large Package criteria for 2018. This charge will now apply to packages exceeding 96 inches in length for both US air and ground services. While FedEx previously had a threshold of 108 inches for Express services, UPS did not include this caveat for Large Packages in prior service guides.
Getting to the cost of these newly re-defined surcharges, we start to see a clear picture of what FedEx and UPS hope to accomplish. Both carriers implemented an additional charge for the already premium Large Package surcharge during the peak holiday shipping season — UPS at $24 and FedEx at $25. Meanwhile, FedEx added an extra $3.00 to its Additional Handling surcharge during peak. UPS will follow suit for the 2018 holiday season with their own $3.15 add-on to the standard Additional Handling surcharge.
All of this was a sign of even more cost-prohibitive measures to come as we look ahead in 2018. The standard rate increase will see both FedEx and UPS equal each other with Additional Handling fees at $12 while the Oversize charges grow to $80. However, UPS is taking another dramatic step beginning July 8, 2018 when any package with an actual weight over 70 pounds will bring the Additional Handling Fee up to $19, and all residential shipments deemed to be a Large Package will now pay a $90 surcharge. UPS has also taken the lead on 2018 peak surcharges with the following size-related charges:
- The newly defined Large Package Surcharge will increase an additional $26.20 per package from November 18, 2018 – December 22, 2018
- All Additional Handling fees will increase an extra $3.15 per package from November 18, 2018 – December 22, 2018
While the FedEx 2018 peak season charges remain to be seen, it is not hard to predict a similar announcement forthcoming to once again deter bulky shipments entering their small parcel network.
The abrupt and recent nature of these charges leaves a solutions gap in the market for shipping medium to large parcels. However, there are still some short-term solutions while remaining with FedEx or UPS. As always, shippers should look to negotiate concessions on both standard and peak season charges. Secondly, there are opportunities to explore regional carriers that may still be more generous in accepting and delivering large packages. Finally, it is important to assess your packaging to help avoid triggering theses oversize charges. Just as the national carriers have corrected for the market’s influx of bulk items, time will tell how shippers respond to being largely priced out of shipping bulk packages.
Greg Merz is Sr. Analyst, Transportation Solutions Consulting at enVista. Contact him at firstname.lastname@example.org.