What is a Demand Surcharge - What can you do?
What is a Demand Surcharge
FedEx and UPS began charging a secondary surcharge during their peak season a few years ago. Initially, that peak season started on Black Friday and ended on December 22nd or 23rd. They stated that the cost of doing business increased significantly during this period, and they needed to raise prices. In 2018, these additional charges lasted 35 days. In 2025, the demand surcharge period will last 111 days. The additional cost per package can vary from $0.40 to $545.00.
Over the past five years, more surcharges have been added to the demand surcharge. In 2024, the national carriers decided to apply a demand surcharge fee on almost all shipments, which they simply labeled “Demand Surcharge.” The demand surcharge timeframe is divided into three periods.
Below is a list of demand surcharges that are applied on top of the primary surcharges you pay during the year. This will hurt your bottom line. However, there are things you can do.
What is a Demand Surcharge – What You Can Do
Turn 1 Package into Multiple Packages
If a package qualifies for an additional handling surcharge and is also subject to a demand surcharge, do the math. It may be cheaper to split that product into two packages to avoid additional handling surcharges. This can save you a significant amount of money.
Review Package Details
You may be able to redesign your package so that it no longer qualifies for the additional handling surcharge. Review your package characteristics and make adjustments where possible.
Offer Incentives to Ship Outside the Demand Surcharge Period
During the demand period, try to ship during the less expensive timeframes. If your products are not urgent, hold them until January 19, 2025, when peak rates expire.
Oversize shipments: Save up to $90 per package
Additional Handling: Save $8.25 per package
You can also save by shipping more during the lower-cost demand periods:
Ship a qualifying Additional Handling package on Nov 23 instead of Nov 24 and save $2.65.
Ship an Oversize package on Nov 23 instead of Nov 24 and save $18.50.
Packages That Qualify for an Additional Handling Charge:
Packages weighing over 50 lbs.
Packages with the longest side exceeding 48 inches, or
Packages with the second-longest side exceeding 30 inches, or
Packages where the combined length and girth (Length + 2×Width + 2×Height) exceeds 105 inches
Irregular packaging