Dive Brief:

• United Parcel Service on Monday announced new peak delivery charges for November and December for residential, large packages and parcels over certain weight limits, according to a post on its website. The move is an attempt to offset the expense of holiday shipping and deliveries, which have ballooned in recent years with the growth of e-commerce.

• Peak charges, applicable from Nov. 19 through Dec. 23​, will be in addition to the shipper’s regular surcharges for size and weight beyond defined limits. For those, UPS suggested using its UPS Freight option.

• UPS will also apply a peak surcharge on specific international air shipping lanes during certain periods of the year, the company said. Despite the extra charges, per package costs will rise "only marginally," the company said. For example, a five-pound UPS Next Day Air package shipped from Atlanta to a Philadelphia residence during the peak holiday window will rise about 1% above non-peak shipping times. A similar package shipped to a commercial address would have no additional cost.

Dive Insight:

Record-setting e-commerce sales last year on Black Friday, Cyber Monday and throughout the holiday season placed greater-than-ever strains on shipping companies, and growth is only expected to continue. 

Last year, Cyber Monday sales reached a record $3.45 billion, well past a forecast for $3.36 billion and a 12.1% increase over the year-ago period, according to an Adobe Digital Insights report. Online shopping accounted for $36.5 billion in online revenue by the end of November, with 26 out of 27 days in November generating $1 billion each day.

All that sent UPS's average daily volume above 30 million packages on more than half of the available shipping days, the company said Monday, well past its typical non-peak volume of more than 19 million packages. Then in January, the returns cycle kicked in: Just after the new year UPS said it was ramping back up to deliver a record 5.8 million returns to retailers during the first week of January and 1.3 million returns on Thursday, Jan. 5, which the company has dubbed National Returns Day.

Throughout 2016, UPS shipped almost 5 billion packages, with almost 3 million packages and documents shipped every day by the its airline. Almost 3% of global GDP and 6% of U.S. GDP flows through the UPS network every day, the company said.

Despite anticipated record shipments, both FedEx and UPS hired roughly the same number of seasonal employees during the holiday season as they did for the holidays the previous year. But the added personnel, rising wages and other expenses added to the bill. To meet peak volume demand, UPS temporarily acquires (often at shorter-term premium rates) additional air and truck cargo capacity, facilities and additional sorting and delivery personnel, the company said. Plus, shipments that are larger, heavier or have unconventional shapes or sizes create greater operational complexity during high-demand periods.

“To meet their requirements, UPS flexes its delivery network to process near double our already massive regular daily volume, and that creates exceptional demands,” UPS Chief Commercial Officer​ Alan Gershenhorn said in a statement. “Our goal is to help every customer obtain the delivery capacity they need, combined with predictable and timely service they count on from UPS, even when there is limited capacity in the UPS network.” 

For retailers, the surcharges underscore the high cost of e-commerce fulfillment. Expectations for free and fast delivery are heightened at the holidays, and careful logistics, including using the most minimal packaging for deliveries, becomes all-important.