Hide and PEAK: How to avoid demand charges
FedEx and UPS's peak season demand surcharges will be here in two months, but not everyone will be affected in the same way. For many, peak season invoices will look like business as usual. Others will pay a far higher price.
Today, we're letting you in on the secrets the carriers don't want you to know about how you can avoid getting hit with major demand surcharges.
Incentivize early shopping
While we technically have over three weeks left of summer, the holidays will be here before we know it. Many shoppers are holding out on holiday shopping until they find the best possible deal— usually right in the middle of peak season. Instead of waiting until Black Friday to drop your biggest sale, entice loyal customers to make holiday purchases now. The result is a win-win: you ship outside the peak season window, and your customers get a head start on shopping.
Remember, the peak season begins October 27 for UPS and October 28 for FedEx, so start your marketing now!
Make sure current discounts still apply
When you negotiated your current parcel contract, you probably secured rate discounts. (If you didn't, we can help!) Those discounts were likely contingent on shipping and spending minimums. Before peak season starts, double-check your contract to make sure you're still eligible for those discounts.
Diversify carriers
This advice is for you if you have shipped more than 20,000 packages in any single week during UPS or FedEx'scalculation weeks. FedEx and UPS assess each shipper's "baseline" volume in June, and when shipping volumes exceed that baseline during peak season, the carriers impose surcharges.
For those who have a quieter summer, demand surcharges are guaranteed. You can avoid this surcharge by offloading excess shipments to USPS or smaller carriers.
Not keeping track of your baseline and overage can cost you up to $8.25 per package. Understand your options now to avoid sticker shock during the holiday season.
Check size/ weight
Shipping large packages can incur a surcharge of up to $100, while over-maximum package surcharges are up to $500 per package. If your product is below the maximum size/ weight, avoiding the charge is as simple as choosing small, lightweight packaging.
For those whose products are above the maximum allowed size or weight, ShipRx can help you negotiate a discount on the fees or, if your product is almost within limits, request a variance in the definition of the overage.
Renegotiate contracts
There's nothing we can do to stop peak season from arriving in two months. But there's plenty we can do to stop its impact on your finances.
ShipRx will evaluate your current contract for free and help you negotiate new terms to lower your shipping costs by 20%-30% or more by reducing your regular rates and surcharges.
When you choose ShipRx to help you with the renegotiation process, you can swap the unknowns of demand season for consistent, reliable invoices— even during the busiest season of the year.