Small parcel costs to surge in peak season
With the holiday season approaching; businesses must keep demand surcharges in mind to mitigate an expensive quarter. With peak season results calculated weekly; companies can expect demand surcharges that; based on our client analysis; will increase their Q4 spending by 5-15%.
FedEx and UPS show an increase of minimum of $1 in demand surcharges
As Q-4 begins; residential and air shipments from UPS and FedEx will increase starting October 27th and peak the day before Thanksgiving. Residential packages will increase by roughly $1 before Thanksgiving and $2 until the first week in January and will increase further by service level and additional handling. Demand surcharges apply to all ground residential and air shipments.
On August 15th; FedEx and UPS announced their use of demand surcharges. Supply and demand are evaluated on “calculation week;” which analyzes the customer’s shipping volume to decide the appropriate cost. Size and weight surcharges are also set to increase; peaking in December. In addition to an overall demand surcharge increase and size and weight surcharges; companies with increased shipping volume will also experience inflation. Any shipment changes from 2023 to 2024 will result in a percentage increase based on the difference between years.
Mitigating demand surcharges
To mitigate demand surcharges in business; owners; and CEOs should evaluate shipping schedules from past years. Analyzing data allows C-level executives to budget appropriately for quarters three and four. Organizations must also consider 2024's previous quarters regarding the business's expansion or contraction. Preparing your company for a busy season is critical; and strategies like buying material in bulk as well as looking for additional revenue are a few ways companies can navigate the holiday season while providing considerable value to their customers.
ERA helps decrease small-package spending despite rising costs
Even with rising end-of-the-year prices; there are still ways to reduce costs. Unlike other companies; ERA Group focuses on more than negotiating better discounts; we add operational enhancement to negotiations to yield more significant savings.
Our approach to assessing clients' operational needs and analyzing pricing options that meet those specific needs allows organizations to re-invest in their company with the resources found. Additionally; implementing informed operational adjustments further reduces accessorial and transportation charges. By combining these changes with expert rate renegotiations; ERA has helped clients achieve more than an 18% reduction in express and parcel costs.
