Dive Brief:
- UPS will levy a per-pound charge on all U.S. imports coming from China and several other countries starting Sept. 15, according to a Thursday notice to shippers.
- Ten countries will have a $0.25 per-pound "Surge Fee" applied to shipments headed to the U.S. A $0.50 per-pound charge will apply to shipments from China, Hong Kong and Macau.
- The fee is based on a shipment's billable weight and is subject to UPS' fuel surcharge. The company also said the fee, which had no listed end date, could be adjusted in the future.
UPS Surge Fee
| Fee price | Origin countries and territories affected |
|---|---|
| $0.25 per pound | Australia, Japan, South Korea, Indonesia, Malaysia, Philippines, Singapore, Taiwan, Thailand, Vietnam |
| $0.50 per pound | China, Hong Kong, Macau |
*The fee takes effect Sept. 15.
Dive Insight:
The new surcharge will help UPS maintain reliable service for all its customers by ensuring the company is "compensated appropriately for additional costs incurred," spokesperson Brian Hughes said in an email. It should also drive more revenue for the company on fast-growing shipping lanes, according to parcel shipping experts.
While UPS' overall average daily export volume declined year-over-year in Q2, Asia exports grew by 1.7%, CFO Brian Dykes said on a July earnings call. On the China-to-U.S. lane, export volume jumped 20.6%.
"Within international air freight, strong e-commerce demand, particularly in China outbound, drove an increase in volume and lifted market rates as demand outpaced capacity, resulting in an increase in revenue," Dykes said.
UPS and other parcel carriers are grappling with a flood of packages coming from Asia-based e-commerce marketplaces like Temu and Shein. These types of companies provide plenty of volume for carriers, but their packages are typically not as profitable to deliver as healthcare and small business shipments.
"This is probably a way for them to mitigate the low-yield problem from Shein and Temu," said Mingshu Bates, chief analytics officer at AFS Logistics, in an interview with Supply Chain Dive.
UPS has levied similar international surcharges in the past, but the new "Surge Fee" name means shippers' current agreements with UPS don't include language that lowers the cost of the charge, Shipware experts Matt Bohn, director of carrier mix optimization, and Paul Yaussy, director of parcel consulting, wrote in an email to Supply Chain Dive. They expect FedEx will announce a similar charge to UPS' Surge Fee in the coming weeks.
"For FedEx, there is really no benefit to not doing the same," they wrote.
Although FedEx hasn't announced a directly comparable fee yet, it did recently implement a $0.25 per-pound import demand surcharge on Aug. 5 for parcel shipments from China, Hong Kong and the Philippines into the U.S. The minimum charge is $1 per shipment.
