On Friday August 13th, FedEx announced its peak season surcharges for the remainder of 2021 and into 2022. The size-based surcharges will go into effect starting on October 4th, while the residential-based surcharges start on November 1st. Below are tables that show how these upcoming peak surcharges compare to the peak surcharge that have been in place throughout 2021, the UPS 2021 peak surcharges, as well as the peak surcharges from 2020.
Surcharge Table:
| Surcharge | Services | Peak 2021 Effective Dates | FedEx Peak 2020 | Beginning of 2021 | June 2021 | FedEx Peak 2021 | UPS Peak 2021 | FedEx YoY Increase |
| Peak - Additional Handling | US Express | 10/4/2021 - 1/16/2022 | $4.90 | $3 | $3.50 | $5.95 | $6 | 21.43% |
| Peak - Oversize | US Express | 10/4/2021 - 1/16/2022 | $52.50 | $30 | $30 | $62.50 | $60 | 19.05% |
| Peak - Unauthorized Oversize | US Ground | 10/4/2021 - 1/16/2022 | $350 | $0 | $0 | $350 | $250 | 0.00% |
| Peak Surcharge | Ground Economy | 11/1/2021 - 11/28/2021 | $1 | $0.75 | $1 | $1.50 | $1.15-$5.15 | 50.00% |
| Peak Surcharge | Ground Economy | 11/29/2021 - 12/12/2021 | $2 | $0.75 | $1 | $3 | $1.15-$5.15 | 50.00% |
| Peak Surcharge | Ground Economy | 12/13/2021 - 1/16/2022 | $1 | $0.75 | $1 | $1.50 | $1.15-$5.15 | 50.00% |
| Peak - Residential Delivery* | US Express | 11/1/2021 - 1/16/2022 | $1-$5 | $0.30 | $0.60* | $1.15-$6 | $1.15-$6.15 | 7.5%-25% |
*$0.60 Peak – Residential Delivery surcharge will continue indefinitely on 1/17/2022. This applies only to shippers who ship more than 25k weekly residential packages.
Peaking Chart:
| FedEx Peaking Chart | Peaking Factor | |||
| Service | 110%-200% | 200%-350% | 350%-500% | >500% |
| US Domestic Ground Residential 2021 | $1.15 | $2.25 | $3.50 | $5 |
| US Domestic Express Residential 2021 | $2.15 | $3.25 | $4.50 | $6 |
| US Domestic Ground Residential 2020 | $1.00 | $2.00 | $3.00 | $4 |
| US Domestic Express Residential 2020 | $2.00 | $3.00 | $4.00 | $5 |
| Ground YoY % Increase | 15.00% | 12.50% | 16.67% | 25.00% |
| Express YoY % Increase | 7.50% | 8.33% | 12.50% | 20.00% |
| UPS Peaking Chart |
| Peaking Factor | ||||
| Service | 110%-200% | 200%-300% | 300%-400% | 400%-500% | >500% | |
| US Domestic Ground Residential (Includes SurePost) 2021 | $1.15 | $2.15 | $3.15 | $4.15 | $5.15 | |
| US Domestic Express Residential 2021 | $2.15 | $3.15 | $4.15 | $5.15 | $6.15 | |
Peak Residential Requirements:
- Peak period 1 – 11/1/2021 to 12/12/2021
- Peaking factor will be calculated based on average weekly residential packages from 10/4/2021 to 10/17/2021 divided by average weekly residential packages from 2/3/2020 to 3/1/2020
- Surcharge will apply if average weekly residential packages for 10/4/2021 to 10/17/2021 exceeds 25k
- Peak period 2 – 12/13/2021 to 1/16/2022
- Peaking factor will be calculated based on average weekly residential packages from 11/15/2021 to 11/28/2021 divided by average weekly residential packages from 2/3/2020 to 3/1/2020
- Surcharge will apply if average weekly residential packages for 11/15/2021 to 11/28/2021 exceeds 25k
- Peak period 3 – 1/17/2022 to indefinite
- $0.60 surcharge
- Surcharge will apply if shipper exceeded 25k average weekly residential packages for either 10/4/2021 to 10/17/2021 or 11/15/2021 to 11/28/2021
With the announcement of FedEx’s peak surcharges, shippers now have a much better picture of what shipping costs will look like this peak. There are a few things to consider with this announcement:
- FedEx and UPS have similar peak surcharges for 2021. The main differences are FedEx has slightly different peaking factor tiers, and FedEx is issuing peak surcharges on Ground Economy separately from the peaking factor.
- With most of the surcharges experiencing a double digit percent increase vs last peak, these surcharge will likely have a wide ranging impact across various types of shippers.
- FedEx is maximizing the impact of the peaking factor by using the Feb 3, 2020 – March 1, 2020 period, instead of the same period in 2021. This guarantees that none of the e-commerce growth over the last year will be factored into the peaking factor, which will lead to a higher peaking factor for e-commerce shippers. This is similar to how UPS is calculating their peaking factor.
- Given the high demand for parcel, both national carriers have the leverage which they use to dictate any pricing adjustment as they feel like. The shippers who ship more than 25K residential packages will receive an additional $0.60 on top of the 2022 general rate increase. At this point the terms “temporary” or “peak” have shifted into another meaning, as these surcharges have been around since the beginning of COVID, and there is no end date in sight.
You can read the full announcement here.
Keegan Leisz is a Senior Consultant at enVista, a global consulting and software solutions firm. In his role, Keegan is responsible for negotiating parcel carrier contracts and specializes in analytics. You can contact him at kleisz@envistacorp.com.
