Navigating Peak Season Shipping Surcharges

For a long time now, the arrival of autumn has signaled a beginning to peak season shipping surcharges.

Demand surcharges appearing in the fall are nothing new, yet many are unprepared when they pop up. In recent years, things have gotten worse: it isn’t just your imagination. In 2024, carriers are adding more surcharges, more often. 

In particular, the compressed timeline of this year’s pre-Christmas peak season has shipping surcharges steeper than in recent years. 

This is due to a shorter period between Black Friday and Christmas, which means more shipping is condensed into a shorter period.

A silver lining in all this is that shipping surcharges for peak were announced earlier than ever this year. That gives you and all the other DTC brands a little extra time to figure out a peak season plan. 

As an e-commerce business owner, there’s a lot to think about when it comes to holiday season sales. With all that’s going on, many forget to take the time to figure out how surcharges will factor into your holiday budget. 

However, this is a crucial step; if you don’t plan ahead, you may find surcharge fees carving out hefty portions of your holiday sales earnings.

To avoid that, we’ll run you through the types of surcharges to expect this season, and ways you can plan for them. 

Read About CBIP’s Global 4PL Logistics Services

How do surcharges work?

Peak season surcharges for the Christmas holiday are in effect from late September to mid-January. For instance, UPS’s surcharges go into effect on September 29 and will last until next year January 18.

Some common peak season surcharges include:

• Demand surcharge
• Oversized package surcharge
• Additional handling surcharge
• Fuel surcharge

Demand Surcharge

When you hear people in the shipping industry talk about peak season surcharges, this is mainly what they are referring to. The demand surcharge is put in place for a period of time before the holidays when shipping volumes rise significantly to cover higher operational costs.

Those costs may include any additional labor and/or machinery that the carrier needs to rent or purchase to meet the demand brought by higher volumes during the peak season.

Related: Understanding Carrier Shipping Rates and Negotiating Rate Discounts

Oversized or Large Package surcharge

Each carrier has a set of limits for package size, and any package outside those set parameters will incur an added fee. For FedEx for instance, packages that have a length of over 96 inches or a combined length and girth of over 130 inches are considered oversized. 

Typically, the surcharge will be set based on the dimensional or actual weight of the package. 

Additional Handling Surcharge

An additional handling surcharge can happen for a variety of reasons: As mentioned above, you could be charged more for having a package deemed as oversized by the carrier, or the additional handling charge may be incurred if you improperly package an item.

If your item is improperly packaged, the carrier employee may need to repackage the item; this will incur a surcharge fee. This typically is done if the item is packaged in a way that might damage other parcels en route, or if the package size or shape isn’t compatible with the carrier’s processing machinery. 

Fuel surcharges

Most carriers adjust fuel-based surcharges according to national reports on fuel prices. For instance, in the US carriers base their surcharges on the Gasoline and Deisel Fuel Update Report. When fuel prices rise, surcharges are applied accordingly. 

Other fees to watch out for during peak season

Storage Fees

As shipping volumes rise during peak season, port congestion gets worse and worse. That may mean your goods have to stay put at port for longer than normal, resulting in higher storage fees.

You can avoid these extra storage fees by working with providers who can have your goods picked up promptly, but sometimes, there is no helping it. Remember that you may have to wait longer to get your goods out of a port, and factor any extra associated storage costs into your budget.

Demurrage & Detention Fees

A demurrage fee is the charge for not clearing a container from the port in the allotted amount of time, and detention fees are charged for the delayed return of the empty cargo container. 

If your shipment is stuck at port for an extended amount of time, you can get stuck paying demurrage and detention fees…which can get quite costly. 

If you foresee having issues with delays at port, you can avoid having to pay fees to the carrier by leasing a shipper-owned container (SOC), instead of a container owned by the carrier(COC). 

Be proactive about how to handle holiday surcharge fees

Understand your invoice

Surcharges used to only be implemented during specific periods leading up to holidays (ie peak season). With all the supply chain volatility nowadays, surcharges are popping up all over throughout the year.

The best way to work around extra costs during peak season? Understand what you're paying and why. Understanding your costs and analyzing your past shipping data can help you renegotiate better contracts with your carriers. 

Choose the right carrier for your brand

If you aren’t able to negotiate lower fees with one carrier, you may be better off switching carriers.

Different carriers specialize in different types of shipments. You may choose your carrier depending on various aspects unique to your brand, such as shipping volume, product types, destinations, and level of service needed.

For instance, if you typically ship oversized packages, it might be best to avoid working with a carrier that has a low threshold for oversized surcharge fees. Switching to a carrier that doesn’t charge as much for heavy parcels could save you a lot of money during peak season.

 If you don’t have time to run through all the options, this can be overwhelming. To properly assess all the variables included in choosing your ideal carrier, you may want to work with a 3PL or 4PL that can do the research for you.

Choose to work with a 4PL this peak season

Peak shipping season is gearing up to be particularly intense this year. More than ever, it’s important to make sure you understand all shipping costs for your brand, and that you are working with the right carriers to suit your needs.

The best way to do that is to work with a logistics provider like a 4PL like CBIP Logistics.

At CBIP, we will do all the research and analysis to match you with the most cost-efficient shipping options this season. We set up your logistics using our international network of logistics partners, then we manage it with you as partners.

If you are interested in chatting with us about how we can make this peak season your best one yet, reach out today to set up a free logistics consultation with us.