Resource Center/Article • 11/18/2020

Peak Season is Here, but FedEx, UPS, Regional Carriers, and Even Shippers Have Their Eyes on 2021

FedEx & UPS continue to focus on process & tech optimizations for 2021, regionals feel the same pain, and shippers are caught in the middle.

Parcel Carrier News

FedEx acknowledges peak season capacity concerns, addresses prioritization of a COVID-19 vaccination, and announces a friendly returns partnership.

After Pfizer’s announcement of a 90% effective COVID-19 vaccine, FedEx announced itself “ready to deliver it around the world,” with a commitment to avoid transportation bottlenecks. More specifically, the carrier promised to “free up whatever capacity is needed” to ensure the vaccine is able to move quickly across the globe, though it still remains unclear exactly what steps FedEx will take to make this happen. Since Project Airbridge, FedEx remains an integral transportation partner to the federal government for any attempt to distribute a COVID-19 vaccine. The carrier has reportedly remained in close contact with various government agencies, as well as Pfizer, to discuss roll-out plans. A recent estimation of a two-year vaccine distribution plan predicts that 15,000 cargo flights will be needed to distribute 10 billion vaccinations globally.
Happy Returns, a returns solution provider, and FedEx recently announced plans to roll-out box (and label) free returns across 2,000 U.S. FedEx Office locations. The process is as convenient to consumers as it is friendly to retailers and the planet – for consumers seeking a return from a retailer partnered with Happy Returns, they need only request a return QR code from the retailer, then bring the product (and the QR code) to a participating FedEx Office location, no box or label required. The return and refund are processed at the FedEx Office, notably in less than a minute. FedEx then ships the return in bulk to distribution centers utilizing “proprietary software to accept, sort, and process co-mingled returns.” For many retailers, this partnership will likely prove to be a longterm network optimization win, especially following peak season which is notable for its high return volume.

UPS announces continued positive quarterly earnings for 3Q 2020 and Board of Directors changes.

Regional Carriers

Many regional carriers, including LaserShip, LSO, and OnTrac, are now closed for peak season capacity and are now raising Q1 capacity concerns. “We will have a second peak,” said Richard Metzler, CEO of LSO, “And it’s called the first quarter.” Regional carriers face the same concerns as FedEx, UPS, and USPS – meeting the growing demand with as little harm to their business and customers as possible. This means maintaining the integrity of their networks while simultaneously expanding them, selectively identifying which shippers are more likely a positive and profitable partnership, and ensuring delivery targets this peak season.

General Rate Increases, Service Changes, and Peak Season Surcharges

UPS has also announced multiple changes to peak season surcharges for international shipments. See our roundup of UPS peak season surcharges for more details.
FedEx Canada renamed the Temporary Surcharge that began Apr 6 for Express International shipments to Peak Surcharge, and changed the surcharge amount for some FedEx Express international shipments originating in Europe and MEISA increased from $0.14 per lb. (0.5 kg) to $0.30 per lb. (0.5 kg). The shipment minimums remained the same. Both changes are effective Nov 2, 2020.
UPS Canada announces price change for peak season surcharge affecting shipments from Europe to Canada. Beginning Nov 15, the peak surcharge for UPS Worldwide Express Plus, WW Express, WW Saver and WW Expedited shipments from Europe to Canada will increase from USD $0.11 per lb (CAD $0.15 per lb) to USD $0.18 per lb (CAD $0.24 per lb).
Don’t miss our roundup of COVID-19 and Peak Season related carrier surcharges and rate changes, including the first ever peak surcharges from USPS.

Shipping Industry Trends

Carrier Performance

No DAS 2020 to DAS 2021 – 699 (all reg)
DAS Reg 2020 to DAS Ext 2021 – 121
DAS Ext 2020 to DAS Reg – 1,076
DAS Ext 2020 to No DAS – 0
DAS Reg 2020 to No DAS – 428
753 new ZIP codes
482 ZIP codes removed
DAS Ext
2020 – 18,140
2021 – 17,185
DAS Reg
2020 – 6,003
2021 – 7,229
How are your carriers performing this peak season? Let us know with the 2020 Peak Season Carrier Performance survey! Results are completely anonymous, and GMT will share the results alongside industry insights tied to findings.

Fuel Trends

Current Price (⬇): October Oil Prices declined due to the ongoing COVID-19 Pandemic, as the decrease in oil prices correlated with slowing global oil demand.
Supply (⬇): EIA reported 10.6M b/d of crude oil was produced in the United States in August; down 0.4M b/d from July. Production fell in August due to production disruptions from hurricane events.
Demand (⬇): Global consumption will average 92.9M b/d for all of 2020 down 8.6M b/d from 2019. Increasing by 5.9M b/d in 2021. The reduced forecast is driven by lower than normal demand due to COVID-19.
Price Forecast (⬇): Brent Crude Price Forecast to $40/b for the remainder of 2020. EIA anticipates $47/b in 2021 as oil markets become more balanced. EIA expects global oil demand rises with inventory draws in 2021 putting upward pressure on oil prices. The Short-Term Energy Outlook remains subject to heightened levels of uncertainty due to mitigation and reopening efforts related to COVID-19.

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