Retailers and online sellers are ramping up for the busiest time of the year. It takes a lot to prepare for peak season – extra inventory checks and orders, more hiring to manage the added work, and maybe even budget increases for marketing. After all this, sellers deserve to sit back and admire all the hard work that brought them here, but high peak season surcharges might be dampening this celebration. Amazon, Canada Post, FedEx and other delivery providers are introducing higher than ever fee increases.
Wouldn’t it be nice to avoid fee surcharges and instead, make more profit during the busiest shopping season? Obviously. But understanding how to avoid charges while still meeting customer needs and expectations can be a tough barrier to overcome.
Let’s dive into more depth about what peak season surcharges are going to look like for you this year. What are the prices going to be, how are they going to affect you as a seller, and – most importantly – how can you get through this season without extra costs getting you down?
What Are Peak Season Surcharges
Peak season surcharges are added delivery fees that occur during the busiest time of the year. For most sellers, this will be between October and January, when many major holidays and celebrations occur. In response, some delivery providers will increase delivery fees due to the increase in demand.
Peak season surcharges are not the same as general price increases. While prices may increase overtime as demand changes and prices naturally rise, peak season surcharges last for only a few months of the year before returning back to normal.
These additional fees are most commonly applied to residential deliveries, oversized items, and priority services. Delivery providers will say this is because they are often the most expensive services or require the most manual labour. During the peak season, this means extra workers need to be hired for the season to meet expectations. For example, residential deliveries require last-mile services, meaning delivering the parcel right to the customers house. Since this is the most expensive part of any delivery process, you can expect these services to be more expensive during the holiday’s.
What to Expect
With this year’s surcharges being some of the most expensive ever, here are some major trends being identified that merchants should be aware of.
Surcharges are becoming more normal
Some companies are introducing peak fees this year for the first time ever. Even fulfillment and delivery providers who typically wouldn’t, like Amazon, are now forcing peak season fees onto sellers. This points to next year having even higher, and possibly more, peak season fees on deliveries of all types.
Surcharges are lasting longer
Now lasting into mid-January, peak surcharges seem to be lasting for longer than usual. What the name suggests lasts for the “peak” of shopping now covers just about a quarter of the entire year. This might be in relation to shopping habits, as consumers are expected to shop earlier for the holidays this year and likely take part in the sales that go on shortly after. But where’s the line between peak fees and just plain price increases?
Split peak seasons
Some providers have begun to separate their peak fees into two, or more, separate time frames. Some have split it up as before and after December, others earlier or later. These blocks allow them to charge more at certain times, increasing surcharges even more for the very busy weeks.
Since the pandemic, prices everywhere have gone up and delivery providers, although receiving more service, have possibly been paying higher prices for things like fuel. Hence, these “peak-peak season surcharges” allow providers to make even more when deliveries are at their highest, costing you extra fees when you should be making the most profit.
2022 Peak Season Surcharges
Here are the peak season surcharges for the major shipping and delivery providers in Canada. See their comparison to FlashBox same-day delivery prices later on to see how you can save big this holiday season!
Canada Post started introducing peak season fees as early as September 5, 2022, and running them until January 15, 2023. In addition to extra fees, they’re also changing their delivery guarantee claims during this period. Packages can only be claimed late if they arrive two or more business days after the standard delivery time, meaning on-time deliveries are likely going to be less common. This will be for PriorityTM, XpresspostTM, and Expedited ParcelTM Canada Post services.
Domestic parcels will also see an average price increase of 4% .
And finally, Canada Post is also posting post increases for some of their delivery add on services, which includes:
- Signatures now costing $2 each instead of $1.75,
- Liability coverages for up to $100 increasing to $2.50 from $2.25
- And oversized parcels now costing an additional $25 instead of $18.
FedEx peak season surcharges can add significant fees onto what merchants are paying during the year. This major delivery provider is also separating their peak seasons into multiple categories, differentiating the merchant costs between each.
Peak surcharges have been introduced by FedEx as early as September, but the charges for typical ground packages begin on October 31, 2022, and will run until January 15, 2023.
You can see the full list of FedEx surcharges here:
|Peak – Residential Delivery Charge||FedEx Express and FedEx Ground U.S. domestic residential packages (excluding FedEx Ground Economy and FedEx One Rate® packages).||Based off overage percentage*||Oct 31 – Jan 15|
|Peak Surcharge||FedEx Ground Economy Services||$1.50|
|Oct 31 – Nov 27|
Nov 28 – Dec 11
Dec 12 – Jan 15
|Peak – Additional Handling Surcharge||US Express Package Services, US Ground Services, International Ground Services||$3.45|
|Sep 5 – Oct 2|
Oct – Jan 15
|Peak – Oversize Charge||U.S. Express Package Services, U.S. Ground Services, International Ground Service||$39.50 ea|
|Sep 5 – Oct 2|
Oct 3 – Jan 15
|Peak – Ground Unauthorized Package Charge||U.S. Ground Services, International Ground Service||$385||Oct 3 – Jan 15|
* FedEx is charging based on overages, meaning the more you deliver over your usual volume, the more you pay for each parcel.
FedEx is also charging extra for their regular ground services across Canada, including all residential deliveries.
UPS is kickstarting a new year of peak season surcharges, but only for their larger merchants.
This chart below depicts how UPS is charging their big sellers much more this holiday season. Any seller who delivered more than 20,000 parcels in a week since October of 2021 is subject to these additional charges per parcel when they go over their predetermined average.
The categories signify how much sellers go over their average weekly deliveries, and based on this, every additional parcel is charged the corresponding amount extra. In a way, it’s like being docked pay for earning more orders.
|Peak Factor||>105% – 125%||>125% – 150%||>150% – 200%||200% 300%||>300% – 400%||>400%|
|UPS Next Day Air||$2.25||$2.75||$3.00||$3.50||$5.25||$7.00|
|Other UPS Air Residential||$2.25||$2.75||$3.00||$3.50||$5.25||$7.00|
And finally, DHL is introducing surcharges for some of their merchants as well. Ground parcel services are being upped by $0.40 in some delivery zones. DHL is also separating their peak season fees into sections, one from October 2 – November 12 2022, another from November 13 to December 17 2022, and finally one from December 18 – January 21, 2023.
You can find more on DHLs peak season surcharges here.
How to Adapt
How do you know when it’s time to switch delivery providers? If peak season surcharges are going to significantly affect your profit margins, this might be one sign that your current partner isn’t matching your needs.
Some providers, like FedEx, charge you based on how much more you’re shipping compared to volume from the past. If you ship more than you expected, you end up paying much higher prices on the additional deliveries. Other delivery providers, like UPS, are charging additional surcharges for their larger providers based on volume from a year ago. For you, this can mean much less profit than expected, and deliveries that are way too expensive. If you’re making more and receiving more orders, you’ll ultimately pay the price with higher surcharges.
The other bad news is that these surcharges are only going up. In comparison to last year, peak season surcharges are up 8%, meaning they are likely to rise again in the future. With these trends in place, remaining with a provider who charges peak fees could come back to haunt you again in the following years. What’s even more frustrating is that while last year’s peak surcharges were applied once merchants went 10% over their average volume, prices increased this year starting after only 5% for most major delivery providers. This means that even a small spike in volume will cost you big, resulting in less profit taken away.
The peak season prices are also getting much more granular. Both FedEx and UPS have more categories for average weekly deliveries than they did last year, incorporating many more companies into the higher fee classes. This affects more businesses than in the past and will likely continue to expand in the future, forcing almost all business sizes to pay extra during their most profitable months.
Avoid Surcharges With FlashBox
The solution to your peak season surcharge troubles is to work with a company who doesn’t charge them – seems simple enough, right? The hard part might be finding the provider who fits your needs and also doesn’t have you pay more during your most profitable season, and the answer is FlashBox.
FlashBox doesn’t charge peak season fees at all, so your deliveries will remain the same no matter what time of year it is. We know this is your time to sell, sell, sell, and we want you to take away as much of that as possible. No matter what your volume is, you don’t have to worry about hidden fees or rising prices.
FlashBox prices are not only stable throughout the year, but they are completely flat-rate fees, so you can have everything you need, for the price of one. That means that every parcel you deliver includes all sizes, weights, and destinations, plus parcel insurance! Switching to FlashBox is one easy way to not only cut costs, but find everything you need under one umbrella.
Get Started Today
Looking to start delivering today? Getting started with FlashBox takes less than a day and gives your customers exactly what they want – fast, affordable delivery. Working with FlashBox is the best way to avoid peak season surcharges and make the most of this holiday season.
Talk to one of our experts today to start delivering!
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