The First Item on Shippers’ Holiday Wish Lists? Lower Costs

In a recent blog post, we warned shippers about the compressed period between Thanksgiving and Christmas in 2024, since Thanksgiving falls on November 28. As we discussed, this condensed holiday shipping season means parcel shippers need to start lining up their resources now, and making sure their halls are properly decked in advance with labor, inventory, and other essentials. 

In addition to considering your resource needs, it’s also time to think about your holiday shipping budget. In late August, you may not be thinking about December shipping costs, but rest assured that carriers are.   

In its July 23 earnings call, UPS made a few major announcements that may impact your holiday plans. First, shippers who have been paying demand surcharges throughout 2024 will face a series of new surcharges, beginning on September 29, that will impact holiday shipping rates. Second, the shipper predicted that December 18, 2024, will represent its highest daily shipping volume ever.  

On August 15, FedEx announced its own surcharge increases, including peak-season rate increases that begin on October 28 and end on January 19, 2025. 

While holiday surcharges are never positive news, at least UPS and FedEx warned of their rate increases over the summer months, giving parcel shippers plenty of time to plan ahead. Shippers can control their costs by thinking strategically now about their holiday plans, including their overall transportation budget and carrier mix.  

Make Your Carrier List and Check It Twice 

It’s worth noting that some experts believe UPS in particular has overestimated its projected shipping volumes for late 2024. So, if your holiday shipping strategy traditionally leverages UPS, you may be able to negotiate these surcharges now, based on your historic volumes. As overall US delivery capacity is expected to exceed demand, FedEx should also be open to rate negotiation.  

At the same time, don’t forget you have options beyond the big carriers. More and more shippers are turning to a diversified carrier network to save money. Now is the right time to start planning your holiday shipping volumes and rethinking your carrier mix to maximize your profit margins during peak season. Like Santa, you need to make your list and check it twice. In assessing your carriers, consider these three key characteristics: 

• Shipping costs and schedules that match your needs. Start gathering data on rate schedules, service offerings, and shipping deadlines — from both established and new carriers — to understand how you can combine low cost with delivery timeliness. Analyze your customers’ zip codes to see how carrier surcharges will affect your specific shipping patterns. Look at your expected returns/reverse logistics needs and find a carrier who can easily and cost-effectively accommodate them. 
• Connectivity and visibility, to maximize your awareness. In today’s digital age, you should be working with carriers, whether old or new, that leverage advanced technology to connect directly to your systems. Both you and your customers should have access to real-time delivery status, as well as visibility into any delays as your products move over the river and through the woods. This is no longer optional, but a requirement for any carrier that wants your holiday business. 

• On-time delivery performance and issues resolution. For your established carriers, you already have historic data that should help you accurately assess them. How well did they handle the 2023 holiday rush — which wasn’t quite as rushed as 2024? Did they deliver on time? Did they respond well to any issues? Were product mis-deliveries and returns handled seamlessly? Don’t forget you’re trusting carriers with your important customer relationships. Make sure they consistently deliver outstanding service. 

Have Yourself a Profitable Little Christmas 

At Redwood, we get it. It’s not even Labor Day, and we’re already talking about roasting chestnuts on an open fire. But the fact remains that the earlier you prepare, the better your chances of having a successful Christmas, Hanukkah, Kwanzaa, and New Year’s season.

If you need help evaluating your shipping budget, carrier mix, customer delivery promises or other aspects of your 2024 holiday shipping plans, you can count on Redwood. Our Parcel Advisory team can help you take a more strategic look at your peak-season requirements and objectives. Our experts — including many former professionals at FedEx, UPS and other carriers — can assess your needs and arrive at a plan for success. They can also coach you on rate and contract negotiation to make sure you’re minimizing your costs. 

Looking for technology to help enable parcel shipping, rate shopping between carriers, and a joint solution with your other modes of transportation? Redwood’s Parcel Execution technology can bring all your modes into one transportation management system (TMS) and enable real-time rate shopping and tendering. 

Whatever’s on your holiday 2024 wish list — from increased profits to improved service and sustainability — Redwood has your parcel shipping needs covered.  

Let's partner up! Reach out to Redwood to learn how we can take over sleigh duties. Need more seasonal shipping advice? Check out our Redwood Parcel Holiday Shipping Guide page for all the latest insights.