Insights: The 2022 Holiday Package Shipping Season Approaches with Significant Carrier Surcharges

As eCommerce firms and shippers prepare for the Holiday Package Shipping Season, three major package delivery companies have announced their temporary package rate adjustments for the 2022 – 2023 Peak Holiday Season.

The United States Postal Service filed notice with the Postal Regulatory Commission (PRC) on August 10 to surcharge prices on Priority Mail Express, Priority Mail First Class Packages, Parcel Select and USPS Retail Ground. International packages will be unaffected. Pending an expected approval by the PRC, the surcharges would be effective on October 2, 2022, and stop on January 22, 2023. The conclusion is timed to coincide with the effective date of general semi-annual January postage rate increase.

Commercial mailing and fulfillment vendors normally qualify for Priority Mail and First-Class commercial rates with increases which are “stepped” to reflect heavier weights and expanding zones of travel distance from the mail’s point of induction.

Parcel Select rates are generally used by Commercial Mailers who offer larger quantities of identical shapes and weights. It is interesting to note that the recently inaugurated USPS Connect Local Parcel Delivery Service, Parcel Return Service and lastly Lightweight Parcel Select mail will receive no increase. The Postal Service is aggressively promoting these products and likely wishes to maximize the financial attractiveness to grow their volumes. USPS parcel volumes have fallen by roughly 1% this year.

On August 5, FedEx announced their seasonal increases. The surcharge effective date window seems to begin on September 5, 2022, and end on January 15, 2023. The FedEx surcharge computation method is rather complex. The determination considers the ship date, level of service, delivery point classification as either Residential or not, shipper’s weekly shipment volume levels and lastly whether a package is “authorized” or not. Too much detail to mention here but one should consult with their FedEx representative to understand how their unique shipping business parcel characteristics would affect the surcharge per package. Your contract discounts and agreements surely would have an impact as well.

UPS started their surcharges beginning in late 2021 and continued them throughout 2022. Domestic and selected international shipments are affected with surcharge determinations completed by a complicated classification method as well. Like FedEx, the UPS service level, package size characteristics, delivery destination classification and shipment date are evaluated. Your contract discounts and agreements surely would have an impact as well.

To summarize, Holiday parcel surcharges will continue into January 2023 and will be accompanied by volatile fuel and delivery area surcharges. Budget defensively and work closely with your vendor of choice.

Frank Lynn, Director of Postal Affairs