04 Sep Peak Season Demand Surcharges: Get Prepared for Pricey Parcel Shipping

Posted at 08:17h in Carrier Contract Negotiations, Freight Audit, Freight Cost Analysis, Parcel Invoice Auditing, Transportation News by

Peak season demand surcharges will take a bigger bite out of your budget this year. Are you ready for it? If not, now is the time to prepare for what may be your most expensive peak season ever.

FedEx announced multiple demand surcharges, which will go into effect on Sept. 29 and remain in effect until Jan. 18. 1 The UPS demand surcharge date range is Sept. 28 to Jan. 17. Remarkably, peak season spans 16 consecutive weeks. That’s nearly one-third of the year!

FedEx announced their 2025 peak season demand surcharges on Jul. 8, whereas UPS waited until Aug. 28, just before Labor Day weekend, to declare their surcharges. Put simply, the delay and timing of the UPS announcement gives their customers much less time to develop a plan to mitigate the higher rates.

So, there is no time to lose. SSI can accelerate your preparedness with our parcel-carrier experts who will help you negotiate discounts and optimize your peak season parcel shipping processes. Act now to maximize your savings. Let’s talk.

BE SURCHARGE SAVVY: AN OVERVIEW OF 2025 PARCEL SHIPPING DEMAND SURCHARGES

Peak season demand surcharges are a necessary tool for carriers. Their operational costs increase when package volumes surge far beyond normal capacity levels. In preparation for the holiday season, the carriers increase hiring and put more vehicles on the road to transport and deliver a massive influx of parcels and packages.

Of course, to many shippers, the demand surcharges feel like a money grab, because the steep increases can take a huge bite out of their margins. To compound the pain, peak season is when many shippers most need their carrier’s services.

Because peak season stretches across 16 weeks, it is fair to break the time period into 4 windows of time:

  1. Early Peak: late Sept. to late Oct. Generally, this is the time period when you start paying much higher demand surcharges for additional handling, oversized and unauthorized packages. Be careful to avoid these charges, which remain elevated through mid-January.
  2. Pre-Holiday Peak: late Oct. to just prior to Thanksgiving. Every shipment will have a demand surcharge tacked onto the bill.
  3. Holiday Peak: late Nov. to late Dec. Also known as, “a peak within a peak”, every shipment during the holiday peak will have an even higher demand surcharge included on your bill.
  4. Extended Peak: late Dec. to mid-Jan. For many shipments, you will pay the same surcharge you paid during the pre-holiday peak.

Of note, high-volume enterprise customers will pay an additional residential delivery demand surcharge on each shipment from late Oct. to mid-Jan. The charge will adjust dynamically every week, which makes it very difficult for shippers to accurately forecast their peak season shipping costs.

Visit your carrier’s website to find specific details on 2025 current FedEx demand surcharges and UPS demand surcharges.

PROACTIVELY PLAN FOR 2025 PARCEL SHIPPING DEMAND SURCHARGES

Preparation is essential in order to keep your shipping expenses in check during the peak season rush. As volumes rise, life will get more hectic for everyone in your operation. Consider these strategies to help you save money.

  • Audit your parcel shipping costs and analyze your data. By researching historical peak season data, you can evaluate shipping patterns, understand customer demands, and identify your most common surcharge triggers. We can help! Learn about SSI’s superb freight and parcel audit services below.
  • Budget accordingly. Our parcel experts can help you forecast expenses with precision.
  • Ship early – i.e., prior to Black Friday, if possible. That said, shipping early at any time of the year gives you the opportunity to select less-pricey services such as FedEx Ground Economy and UPS Ground Saver. 2
  • Position inventory in regional distribution centers close to your  customer. Distance-based surcharges can eat away at your profits amid the peak season frenzy.
  • Optimize your packaging. Right-sizing your package dimensions and weights may dramatically reduce your package spend this year. Make sure your fulfillment team has sufficient knowledge and quality-control procedures to minimize costly mistakes.
  • Diversify your carrier mix. You may save by offloading some volume to regional parcel carriers or the US postal service. If you are a B2C shipper, you may find DHL has a particular interest in serving your business. The carrier has been expanding their North American footprint with a focus on expanding their e-commerce capabilities. 3
  • Negotiate and reevaluate shipping agreements often. Engage in conversations to maintain positive relationships.
  • Be transparent with your customers. Clearly communicate how the higher parcel fees will impact their shipments – and how they may save money by choosing ground vs. air service levels.
  • Monitor fuel surcharges, which are often in a state of flux and are consistently trending higher, regardless of real-world fuel prices.  Some experts say FedEx and UPS have  “weaponized” fuel surcharges, because there is little most shippers can do to reduce this cost. 4

PARCEL CARRIERS PLAN TO PUMP UP THEIR PROFITS

You may have noticed that as this year progressed, it became more difficult to secure discounts from FedEx and UPS. That’s because both carriers pivoted from growing market share to attracting customers who yielded the most healthy carrier profit margins. 5

UPS has been the most aggressive of the two in overhauling its rating model and rolling out new surcharges this year, according to a recent TD Cowen/AFS Freight Index report. 6

The pivot was born of necessity. As operating costs increased through the year, profitability suffered, which understandably frustrated many UPS and FedEx stockholders.

As Mingshu Bates, the Chief Analytics Officer and President of Parcel at AFS explains, “low demand and competition from other players have pushed both FedEx and UPS to focus on right-sizing networks to hold onto the volumes they can profitably serve. Carriers typically prioritize volume or profitability, and the pullback on discounting, aggressive pricing changes and earnings call commentary on ‘improvement in the pricing environment’ indicate the pendulum is swinging to prioritize higher yields.” 7

To be blunt, the carriers need to boost their profits in the second-half of 2025. Implementing the highest peak season demand charges on record will help them achieve their profitability goals, at your expense.

SAVE MONEY WITH SSI PARCEL BILL AUDITS

SSI parcel bill audit services provide long-lasting savings as we verify the validity of each charge on every invoice. Costly rate and surcharge increases imposed by parcel carriers can be mitigated as SSI identifies billing errors so you can recover significant savings this peak season.

SSI applies an automated, multi-point process that thoroughly identifies previously undetected mistakes such as these.

  • Late deliveries
  • Service failures
  • Fuel surcharges
  • Incorrect DIM billing
  • Base rate errors / inaccuracies
  • Residential surcharges
  • Erroneous currency conversions
  • Manifested vs. billed weights
  • Duplicate billing
  • Other billing mistakes

Whether you ship hundreds or thousands of parcels and packages every week, your collaboration with SSI will be a money-saving success.

ABOUT SSI

A FedEx-certified freight bill audit & payment (FBAP) service provider, SSI serves the needs of supply chain, operations, logistics, shipping and finance executives.

We transform the complexity of global FBAP into cash savings and supply chain intelligence, providing actionable insights to maximize your profit potential.

  • Customizable solution scales with your growing and dynamic business needs.
  • Automated freight audit drives savings to your bottom line.
  • Over 30 years of experience in transacting international payments for our customers.
  • Fintech platform allows you to pay invoices in 150+ currencies, at favorable exchange rates.
  • Actionable business intelligence supports supply chain optimization and operational efficiencies.
  • Cutting-edge data visualization facilitates your analysis of data and trends.

Want to learn more? Our team is eager to help you save money. Contact SSI.

Footnotes:
1. Max Garland, “FedEx’s 2025 peak season surcharges higher than last year”. July 10, 2025, as published by Supply Chain Dive.
2. Max Garland, “Ground delivery costs hit record high as UPS, FedEx discounts wane“. July 22, 2025, as published by Supply Chain Dive.
3. Keiron Greenhalgh, “DHL Buys IDS Fulfillment to Beef Up US E-Commerce Division“. May 16, 2025, as published by Transport Topics.
4, 5. Eric Kulisch, “FedEx and UPS cease parcel discounts, ‘weaponize’ fuel surcharges: report“. July 18, 2025, as published by FreightWaves.
6, 7. AFS, “Economic uncertainty shapes stagnant freight markets: Q3 TD Cowen/AFS Freight Index”. July 15, 2025, as published by PR Newswire.

SSI blog post entitled: Parcel season demand surcharges – get prepared for pricey parcel shipping.