Carriers and merchants alike are ramping up for what we know is going to be a more digital Q4 retail season. 7 out of 10 Americans say they still plan to spend about as much on holiday shopping as they did last year. Plus, 87% of Americans say they’ll do more of their holiday shopping online this year due to COVID, with 63% of them saying they plan to do ALL of their holiday shopping online. Accompanying this surge in online shopping comes more packages in transit, resulting in increased holiday shipping rates and surcharges.
Normally, we’re only talking about peak surcharges being added by UPS and FedEx. This year is a little different. For the first time in recent memory, USPS has imposed a temporary rate increase to help them manage the increased strain on resources of the busiest time of year.
And the strain is real. Other things to note aside from the statistics above:
- Major retailers are already stating that they’ll remain closed on Thanksgiving and possibly Black Friday to avoid crowds in stores
- Amazon has announced that Prime Day will take place Oct 13-14
- Due to the pandemic, shoppers who have traditionally been e-commerce averse have been forced to adopt online shopping and will likely stick with it through the holidays and beyond
Let’s get into what kind of holiday shipping rates and surcharges you can expect to see and need to adapt to for this upcoming season.
USPS Holiday Shipping Rate Increases
Unlike their annual shipping rate increases, which take place in January and are covered in-depth here, USPS has implemented a flat rate increase across its most popular services. This increase only applies to their Commercial Rates and not the retail rates they charge at your local post office. Even with the increase, Commercial Rates are still cheaper than going into the post office or USPS website in all instances.
The now-approved changes go into effect October 18, 2020 and last through December 27, 2020. (Official release here)
Normally, there are variable percent increases across weights and zones. The effect of implementing a flat fee is this: the increases to lower weights and zones become more pronounced. We will show a couple of examples as we break down the changes.
USPS Priority Mail is one of the most highly-used services for many e-commerce merchants. The proposed rate increase on USPS Priority Mail is a flat $0.40.
This affects Priority Mail and Priority Mail Flat Rate products. Let’s look at a couple of examples of what that looks like.
We’ll start with a 10-pound package going to Zone 5 as an example.
- 2019 Priority Mail rate: $19.51
- 2020 Priority Mail rate: $20.30 (annual increase of 3.89%)
- 2020 holiday Priority Mail rate: $20.70 (temporary increase of 1.93%)
Now let’s compare that to a lower weight, say a 2-pound package traveling to Zone 5.
- 2019 Priority Mail rate: $8.50
- 2020 Priority Mail rate: $8.76 (annual increase of $2.97%)
- 2020 holiday Priority Mail rate: $9.16 (temporary increase of 4.37%)
While 2.4% difference is not wildly substantial, it certainly affects those who ship lightweight packages disproportionately, as we will see more in the next section.
For those who use USPS Priority Mail Flat Rate options often, below is the percent increase you can expect to see.
|USPS Priority Mail Flat Rate||2020 Commercial Rates||2020 Holiday Rates||Percent Increase|
|Flat Rate Envelopes||$7.15||$7.55||14%|
|Legal Flat Rate Envelope||$7.45||$7.85||13%|
|Padded Flat Rate Envelope||$7.75||$8.15||13%|
|Small Flat Rate Box||$7.65||$8.05||13%|
|Medium Flat Rate Boxes||$13.20||$13.60||8%|
|Large Flat Rate Boxes||$18.30||$18.70||5%|
|APO/FPO/DPO Large Flat Rate Box||$16.80||$17.20||6%|
First-Class Package Service Holiday Rate Increases
Even with the increases, you still won’t find a cheaper way to ship products weighing less than 1 pound than USPS First-Class Package Service (FCPS). It’s a pretty reliable service and allows you to use your own packaging.
For USPS First-Class Package Service, the holiday rate increase is a flat $0.25 across weights and zones.
Let’s take a peek at a couple of examples to see how this shakes out. First, let’s consider a 12-ounce package going to Zone 5.
- 2019 FCPS rate: $3.96
- 2020 FCPS rate: $4.08 (annual increase of 2.94%)
- 2020 holiday FCPS rate: $4.33 (temporary increase of 5.77%)
See the initial effect on lighter packages already? Now let’s go smaller. Let’s look at a 2-ounce package going to Zone 5.
- 2019 FCPS rate: $2.76
- 2020 FCPS rate: $2.84 (annual increase of 2.82%)
- 2020 holiday FCPS rate: $3.09 (temporary increase of 8.09%)
An over 8 percent increase on a lightweight package may leave some smaller merchants with a little sticker shock. While working with razor-thin margins, it can also make it harder for some to offer free shipping to customers who will be expecting it this holiday season.
Below is a summary of all of the changes to USPS services’ rates coming for the holiday season.
USPS Holiday Shipping Rate Increases (October 18, 2020 – December 27, 2020):
- Priority Mail: $0.40 flat increase
- First-Class Package Service: $0.25 flat increase
- Priority Mail Express: $1.50 flat increase
- Parcel Select: $0.40 flat increase
- Parcel Return: $0.24 flat increase for machineable and non-machineable
UPS Holiday Peak Surcharges
UPS already had some peak surcharges in place due to the increased volume caused by the pandemic. These will be ending in mid-November as the holiday peak surcharges go into effect.
UPS Holiday Peak Surcharges will be in effect from November 12, 2020 until January 16, 2021. (Official release here)
Many of UPS’s surcharges are based on qualifying characteristics and are more targeted at higher volume customers. That being said, with the anticipated boost to e-commerce this season, many merchants could qualify who might not previously have.
Important Note: UPS will not apply 2020 Peak Season Surcharges to merchants that opened their account on ShippingEasy. Learn more here.
UPS Holiday Peak Surcharges
Below are the qualifications for a Peak Surcharge to be applied to UPS® Air Residential, UPS® Ground Residential, and UPS SurePost® Packages:
- A Peak Surcharge will apply for all U.S. origins and destinations for qualifying customers who, at any point during the Peak Period, ship more than 25,000 packages per week
- The Peak Surcharge will apply in the amounts set forth below to the indicated service levels during the specified:
Other UPS Peak Period Charges
The following Peak Period Charges are in effect for UPS from October 4, 2020 through January 16, 2021.
UPS offers a little wiggle room before merchants would have to start paying other surcharges. The below surcharges apply to customers who (1) ship more than 1,000 total packages in any week during the Peak Period, or (2) ship more than 10 packages combined that are Large Packages, Over Maximum Limits, or require Additional Handling in any week during the Peak Period.
Once this threshold has been met, the Peak Surcharges apply for the remainder of the Peak Period to all Large Packages, packages that are Over Maximum Limits, and packages that require Additional Handling.
- Additional Handling: $5 per package
- Large Package: $50 per package
- Over Maximum Limits: $250 per package
Note that ShippingEasy offers discounted UPS rates through our ShippingEasy One Balance account, which can help you avoid certain surcharges on some services. Learn more about those discounted rates here.
FedEx Holiday Peak Surcharges
Similar to UPS, FedEx imposes a threshold that triggers peak surcharges. The FedEx holiday peak surcharges are applicable to customers shipping more than 35,000 packages on average per week during periods in October and November.
Merchants will see charges apply later in the year. Customers who qualify will be notified prior to the effective date.
FedEx peak surcharges are in effect from November 2, 2020 through January 17, 2021. (Official release here)
Below is a breakdown of FedEx holiday surcharges:
- $1 – $5 surcharge per residential package. The amount depends on how much more the customer has shipped compared to what they were shipping from February 3 to March 1.
- FedEx SmartPost, the home delivery service in which FedEx hands off shipments to the USPS for the final stretch, will have the following surcharges:
- $1 per package surcharge from November 2 to November 29
- The surcharge increases to $2 per package from November 30 through December 6
- From December 7 to January 17, 2021 it returns to $1 per package
Below is a breakdown of all other applicable surcharges from FedEx.
- 1 See the FedEx Service Guide for the criteria and characteristics of these surcharges.
- 2 FedEx SmartPost is a contract-only service.
- 3 The Peak — Residential Delivery Charge on qualifying U.S. domestic residential FedEx Express® and FedEx Ground® packages.
Depending on your shipping volume and the kinds of products you ship, these holiday shipping rates and surcharges could have varying effects on your bottom line. With many businesses still closed or at minimum capacity, the possibility of more residential deliveries is very high.
As always, ShippingEasy is here to help you navigate shipping and find ways to save time and money on every shipment. Our award-winning support team is happy to provide the assistance you need via phone, email, and chat to make this your most successful holiday season yet.
78% of Americans plan to start their holiday shopping earlier this year due to concerns around COVID delivery delays. 22% have already started shopping. You need to start preparing now. Click below to start a 30-day free trial of ShippingEasy and see just how easy your shipping can be!
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