Resource Center/Article • 01/31/2025
All Hands On Deck: The 2024 Peak Season in Review
Review the 2024 peak season’s key challenges, from surcharges to delays, and learn strategies to optimize costs and performance for 2025.
Brenden Russell
Solutions Manager
Brenden Russell is a Solutions Manager at Green Mountain, a Parcel Spend Management service provider for shippers with over 10 million parcels per year. In this role, Brenden works as a transportation consultant specializing in optimizing parcel networks and uncovering opportunities for clients. He leads a team that uses complex data to create actionable strategies […]
There are three things that occur every peak season:
- Carriers charge peak (demand) surcharges
- Increased shipment volumes slow down parts of the parcel network
- An unplanned disruption occurs that requires a quick decision to mitigate
Predicting the exact specifics of each event is impossible. Instead, the key is to anticipate that these events will happen and prepare for them in the nine months leading up to peak.
Looking at 2024, there were a couple of new curveballs in the form of labor strikes and extreme weather. Canada Post’s strike during peak season highlighted the implications of single-sourcing parcel carriers. Many shippers who solely used Canada Post scrambled to find other carriers that could take the volume. Issues weren’t just isolated to Canada Post, as multiple other carriers such as UPS Canada and FedEx Canada rely on Canada Post for several remote postal codes. The Canada Post agreement was ultimately extended to May 22, 2025. Negotiations with the union will continue. Shippers may be concerned about another potential work stoppage, so they are diversifying their Canada Carrier portfolio in 2025.
In the U.S., Hurricanes Helene and Milton, along with lake-effect snow in eastern Pennsylvania and northern Ohio, impacted infrastructure and transportation from the north to the south with lasting effects. Many of the larger carriers shared the impacted zip codes and lanes as conditions changed. For example, FedEx notes postal codes on their website that experience significant delays or suspended deliveries.
In terms of on-time performance, it was a successful peak season for carriers and shippers in October and November, but the carriers struggled with on-time performance in December. The month started with Cyber Monday, which is generally the heaviest pickup day of the year for parcel shippers and carriers. Green Mountain’s data showed that shippers saw increased ground transit times from all carriers in December. Major facilities in California, Texas, and Ohio experienced pressure from the peak volume surge.
As you can see in the visual above, transit times increase approximately 0.2 days on average across the largest three non-USPS ground carriers from October to December. Increased transit times are an expected part of peak season. This year, carriers experienced a condensed timeline with fewer operating days between Thanksgiving and Christmas compared to last year. A condensed peak season forces more overall volume into a reduced timeline creating bottlenecks throughout the network. Shippers should always make attempts to stay as current as possible with the latest carrier transits. These can often be obtained from the carrier websites, especially for the larger fully national carriers. The image below illustrates the announcement and access to updated transits provided by UPS:
As with transit, shipping costs also tend to increase during peak season. This year, carriers instituted additional peak surcharges (which applied to every residential package delivered) and additional charges for going over set baselines. As an example, UPS charged a demand fee of $2.00 per shipment in their Express (Air) network from November 24th through December 28th.
| Service Level | October 27, 2024 until November 23, 2024 | November 24, 2024 until December 28, 2024 | December 29, 2024 until January 18, 2024 |
|---|---|---|---|
| UPS SurePost | $0.25 per package | $0.50 per package | $0.25 per package |
| UPS Ground Residential | $0.25 per package | $0.50 per package | $025 per package |
| UPS Next Day Air | $1.00 per package | $2.00 per package | $1.00 per package |
| All Other UPS Air | $1.00 per package | $2.00 per package | $1.00 per package |
The demand fees based on baseline volumes also had quite a considerable increase over 2023, with some fees increasing 10%+ YoY.
| Over Baseline Percentage | 2024 UPS Ground Demand Fee | 2023 UPS Ground Demand Fee | Percent Increase YOY |
|---|---|---|---|
| >105% to 125% | $1.50 | $1.35 | 11.11% |
| >125% to 150% | $2.05 | $1.85 | 10.81% |
| >150% to 200% | $2.35 | $2.15 | 9.30% |
| >200% to 300% | $2.85 | $2.60 | 9.62% |
| >300% to 400% | $4.90 | $4.45 | 10.11% |
| >400% | $7.05 | $6.40 | 10.16% |
FedEx had similar fees in a slightly different structure. UPS charges these fees for packages shipped over baseline in a week and invoices those charges in arrears. FedEx calculates a peaking factor in a calculation week and then bills the shipments as they ship during an application week. If you are shipping FedEx, this means your peak fee in each week is not dependent on how much you are shipping that week, but on volume from a prior week.
For large shippers, carriers are willing to negotiate fees and baselines, so it is always important to plan to negotiate well in advance of peak season so that these fees don’t surprise your budget.
There are multiple strategies for mitigating peak costs and impacts:
- Carrier diversification:
Pro: Spreads out parcel volume and creates blow off valves for disruptions.
Con: Distributing volume to multiple carriers decreases bargaining power with a particular carrier.
- Focus marketing campaigns earlier in the year (for instance in October).
Pro: Parcel volume is more evenly distributed, reducing the large spikes between Thanksgiving and Christmas. Carriers usually institute peak fees after October (although time frames are getting earlier each year).
Con: Longer period for increased temp workers and inventory carrying costs.
- Negotiate peak fees well in advance each year:
Pro: Increased lead time to calculate peak season budgets and lower overall cost to serve.
Con: There aren't cons to proactive negotiating as the worst-case scenario is not getting a discount or lower discount than you are trying to achieve.
The time to start planning for 2025-2026 peak season is now. Peak season challenges are inevitable. But with the right preparation, their impact on your business doesn’t have to be. At Green Mountain, our tenured, seasoned experts will help you achieve peak performance year-round. Connect with us today to get ahead of the next peak season.
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