Navigating Peak Season Surcharges with Advanced Rate Shopping Capabilities
Unlock the cost-saving powers of advanced rate shopping tools and how multi-carrier shipping software can facilitate them
The holiday season is one of the most crucial times of the year for businesses across the globe, especially with the massive amounts of online shopping that’s increased over the past several years. In fact, we’ve seen e-commerce revenue in the U.S. increase from $539 billion in 2019 to $1,065 billion in 2023, and it’s only expected to grow from here. For many companies, this period can either make or break their annual revenue as this time can account for a substantial portion of their profits. However, while there are plenty of exciting opportunities for businesses to increase sales, peak season comes with heightened logistical complexities for both parcel and freight shippers.
Especially for shippers, the surge in order volumes during this period becomes a focal point of concern, adding immense pressure to supply chains with warehouses, carriers, and fulfillment centers all scrambling to keep up. The recent dockworkers strike on the East and Gulf coasts, for example, further emphasized the pressure on supply chains, causing additional delays in shipments. Here’s the reality: quick delivery is no longer a luxury – it’s an expectation of the modern consumer. To succeed in the upcoming holiday peak season, businesses must not only optimize their operations but also strategically prepare for potential additional costs that come with increased demand, such as carrier surcharges.
At the heart of this preparation is the ability to control shipping costs. Avoiding unnecessary overspending and maintaining profitability during this busy time requires businesses to implement smarter tools to manage their shipping strategies. An advanced tool like rate shopping can provide shippers with a much-needed advantage. Leveraging this technology enables businesses to compare rates across multiple carriers – both parcel and LTL – based on a variety of pre-defined criteria in real-time. This ensures the most cost-effective carrier is chosen every time while alleviating the pressure of peak season surcharges.
Demand and Peak Season Surcharges: Preparing for the Cost
A surge in order volumes isn’t the only surge we encounter when it comes to the holiday season. During this time, we also see a rise in shipping expenses, largely caused by surcharges – typically a flat fee – that carriers implement to help manage heightened demand and offset increased operational costs from factors such as labor, fuel, and limited capacity. These additional fees may be standard in the modern supply chain world, however, mitigating their impact on shippers’ bottom lines is still a challenge.
Key Types of Surcharges to Watch For
Regardless of the number of times you’ve navigated your way through a peak shipping season, it is still important to stay informed on the various surcharges that carriers are likely to impose during this period, including:
- Capacity Surcharges: These are higher fees applied to shipments to offset the cost of additional handling. This can be determined by several factors including weight, size, lineal feet, and pallet space.
- Residential Surcharges: These are higher fees for delivering to remote or densely populated urban areas, where delivery may be more difficult during peak seasons. It also helps mitigate the cost of failed delivery attempts, address corrections, and other potential delivery complications carriers can face.
- Fuel Surcharges: These are higher fees imposed to help manage the unpredictability of fuel costs. They help cover the potential change in fuel prices during the duration of the delivery process. These additional fees are often calculated as a percentage of the base rate.
It’s important to monitor peak season surcharges notices from major carriers like, UPS, USPS, and FedEx to adjust your shipping strategies accordingly.
The Financial Impact
While a single surcharge may seem manageable, these additional fees can add up and have a significant impact on a business’s transportation costs, especially if they’re applied to thousands of packages. This can cause major strain on a company’s profit margins and heavily influence pricing strategies, shipping rates for the customer, and overall competitiveness. By staying on top of potential carrier surcharges, you can be more prepared to make informed decisions, creating better opportunities for efficient and profitable shipping operations during peak.
Carrier Rate Shopping: Minimizing Financial Strain
For most businesses, the idea of simply absorbing these surcharges is undesirable and many can’t afford to do so anyway. Utilizing carrier rate shopping not only helps shippers save money, but it increases competitiveness in a highly competitive environment. The ability to compare rates across multiple carriers gives businesses an effective way to avoid the negative impact of peak season surcharges. When various factors fluctuate, such as transit time, mode, cost, or carrier performance, rate shopping enables shippers to select the most efficient and cost-effective carrier for each shipment. This capability helps businesses make better informed decisions, leveraging real-time data to ensure shipping strategies can stay agile even in the most challenging conditions.
Furthermore, the ability to rate shop between carriers provides unmatched flexibility. With the constant fluctuation of carrier fees and other unpredictable factors, there is no guarantee that any one carrier will be available at any given time. Having the option to compare rates not only across multiple parcel carriers but also less-than-truckload (LTL) carriers ensures businesses can always find the most cost-effective and reliable shipping solution. Access to alternative shipping options ensures consistent service without being locked to a single carrier provider. This adaptability is key as it can be the difference between maintaining a profitable operation and allowing peak surcharges to devastate your bottom line. Especially in a landscape where customer expectations for fast and cost-effective shipping are higher than ever, utilizing rate shopping between parcel and LTL carriers empowers businesses to navigate holiday shipping challenges seamlessly.
By leveraging a rate shopping tool within your shipping strategy, your business will be better positioned to succeed even during the busiest and financially straining times. However, to fully embrace the benefits carrier rate shopping can deliver, shippers must integrate the right advanced technology to streamline the process and ensure your business is getting the best rates possible. An advanced solution like multi-carrier shipping software (MCSS) takes rate shopping capabilities to the next level, automating rate comparisons in one centralized platform. This ultimately gives businesses a better opportunity to make smarter, faster decisions when dealing with peak season surcharges.
How Multi-Carrier Shipping Software Facilitates Rate Shopping
By automating the carrier rate shopping process, multi-carrier shipping software enhances operational efficiency and cost-saving opportunities for shippers. Let’s take a closer look at how MCSS facilitates rate shopping:
Real-Time Rate Comparisons: Multi-carrier shipping software streamlines and automates the carrier rate shopping process – a far more efficient technique than comparing rates manually across various carrier sites. From a single, unified platform, businesses can use this software to access rates from both parcel and LTL carriers in real-time, saving shippers time on carrier selection and ensuring that each shipment is processed with the most accurate information available.
Flexibility and Adaptability: Factors like demand, surcharges, and capacity limitations can shift throughout the duration of peak season, making the availability of real-time data through MCSS essential. Having instant visibility into available carrier options is crucial for avoiding excessive fees and delivery delays. Multi-carrier shipping software equips businesses with the flexibility to quickly adapt to changing conditions, whether for smaller parcel shipments or larger freight, offering alternative carriers and services when necessary to minimize costs without sacrificing delivery speed and reliability.
Data-Driven Optimization: Additionally, advanced features like automatic rate comparison and integrated analytics empower businesses to evaluate and adjust their shipping strategies. Historical data can help companies analyze shipping patterns and carrier performance to identify key trends and optimize routes. Embracing a data-driven approach not only enhances efficiency during peak season but also puts shippers in a better position to achieve long-term success by integrating rate shopping as a key component in their overall shipping strategy.
Parcel and Freight Rate Shopping with Varsity Logistics
The complexities that come with the chaos of peak holiday season aren’t going anywhere, especially carrier surcharges. However, as businesses continue to search for ways to effectively navigate these hurdles and optimize their shipping operations, Varsity Logistics stands as a trusted partner. With a comprehensive multi-carrier shipping software suite built exclusively for shippers on the IBM i (AS/400) Power Systems, our shipping solution is designed to empower businesses with the robust tools they need, like advanced rate shopping capabilities, to ensure they can effectively manage costs while maintaining top-notch service quality.
For parcel shippers, Varsity’s ShipSoft-Parcel suite offers a top-tier automated carrier selection module, ShipSelect, that evaluates every shipment based on various criteria such as transit time, cost, mode, performance, and carrier service types. This advanced functionality ensures that shippers always choose the optimal and most cost-effective carrier while also adhering to routing guides and various business requirements, all from the moment the order is placed.
Beyond Varsity’s rate shopping capabilities for parcel alone, our MCSS solution allows for advanced carrier rate shopping functionality that enables shippers to compare rates across both parcel and less-than-truckload carriers simultaneously. This automated process streamlines the best-fit carrier selection process, allowing businesses to lower transportation costs significantly, keep shipping operations running smoothly, and ultimately create a better customer experience.
Today’s ever-evolving supply chain landscape requires effective shipping management to remain competitive. With Varsity Logistics on your team, your business can be confident when navigating peak season surcharges, optimizing your shipping strategy for smooth operations and delivering positive customer experiences – all while protecting your bottom line. Ready to learn more about what Varsity can do for your business? Contact our team today or schedule a demo call with our shipping experts to take control of your next peak season.