Rising volumes. Tight capacity. Surging costs. Peak season hits hard and seemingly increases in complexity with each passing year. With fuel surcharges in flux, new surcharges popping up, and shifting service definitions, the rules keep changing. Winning in this environment demands more than quick fixes; it takes sharp data, proactive planning, and the discipline to stay ahead of the curve.
The question is how.
How can shippers protect margins, maintain service levels, and stay competitive during the most challenging shipping windows? The answer lies in leveraging data, technology, and a diversified carrier strategy to optimize costs and build resilience into the network before peak pressure hits.
Why carriers raise prices and what shippers can do about it
Carriers hold pricing power for a reason: limited capacity, increasing demand, and a market dominated by just a few major players. While competitive dynamics are beginning to shift, that leverage remains - and carriers use it. Peak surcharges, fuel fees, service adjustments, dimensional pricing, and the annual general rate increase (GRI) remain core tools to protect their margins and offset rising operational costs.
While these price increases may feel inevitable, shippers are not powerless. Negotiation is a powerful asset that affords some protection for shippers, but it requires consistency. It’s essential to view carrier management as an ongoing process, not a one-time negotiation. Regularly reevaluating agreements, understanding your shipping profile, and diversifying carrier relationships can mitigate the impact of these charges. The aim is to work on these details in concert to maximize leverage and adapt to market shifts.
Data is the key
At the heart of managing peak season effectively is access to timely, accurate data. Shippers need visibility not only into current shipping volumes and costs, but also into how changes in carrier pricing, surcharges, and network capacity will impact their business. And this process starts earlier each year.
Consider how carriers calculate peak season charges. Both FedEx and UPS lean into baseline volumes – usually during the month of June or July – to establish how shippers will be priced during peak periods. Historically, the larger the difference in average weekly volume between the baseline and the peak period, the more shippers would pay. Knowing this, shippers need to be prepared and plan accordingly. That starts with good data. Evaluating shipping patterns, pricing, and customer demands can help shippers make decisions to consolidate, divert, increase, or decrease volumes to help offset later (higher) costs.
Beyond volume and pricing, SKU profitability is also increasingly critical. As highlighted by a recent Wall Street Journal report, free and low-cost shipping is under increasing strain, prompting retailers to scrutinize the true cost of fulfilling each product. Leveraging detailed shipping data at the SKU level empowers businesses to identify which items drive margin and which erode profitability, enabling more informed decisions around product prioritization, volume allocation, and shipping strategies.
Another essential metric is revenue tier attainment - how current shipping activity aligns with the thresholds in carrier agreements. Monitoring progress toward these tiers in real time allows shippers to make strategic adjustments and maximize contractual incentives, ensuring cost control throughout the peak period.
Deliberately implement carrier diversification
Once you have robust data guiding your decisions, the next step is to translate those insights into action. And one of the biggest levers shippers have to control costs and improve service during peak season is managing their carrier portfolio. Relying solely on a primary carrier exposes shippers to both cost and service risks, especially during peak periods when flexibility is paramount. Adopting a multi-carrier approach provides the agility to shift volume, leverage competitive pricing, and maintain service levels even as market conditions fluctuate.
That said, implementing carrier diversification should be a deliberate process. Some key variables to consider include:
● Identifying candidate carriers: What are your priorities - cost savings, simplified pricing, billing ease, better transit times, or improved service reliability? Understanding your goals helps you narrow down carriers that best fit your needs.
● Testing through pilot programs: Short-term, controlled volume tests in specific regions or lanes can reveal whether a new carrier meets your expectations. This approach avoids putting all your proverbial “eggs in one basket,” and provides data to compare carriers objectively.
● Analyzing carrier performance: Continuous monitoring of carrier service, cost impacts, and operational fit allows you to refine your carrier mix over time. Some carriers may excel in certain geographies or product types but fall short elsewhere.
● Partnering with carriers: Establish open, realistic conversations about volume and expectations. Understanding what success looks like for both parties can improve negotiations and foster collaboration rather than adversarial relationships.
Leverage 3PLs and regional networks
For shippers with limited distribution centers or seasonal volume spikes, partnering with third-party logistics providers (3PLs) can be a valuable way to extend capacity and access additional carriers. 3PLs often have established relationships with multiple carriers and can offer creative solutions, such as cross-docking or multiple facility footprints, helping to optimize transit times and reduce costs.
Similarly, regional carriers, especially those partnering with other regionals to expand their networks, provide niche value and competitive pricing. These collaborations can improve service coverage and open new routing options, enabling shippers to diversify their transportation mix without losing reliability.
Close the feedback loop
Data and technology are most powerful when they close the loop between analytics and execution. Shippers benefit from software platforms that not only analyze historical and real-time data, but also integrate with carrier systems and shipping operations to help automate decision-making.
For example, rate shopping tools that incorporate up-to-date carrier pricing, service performance, and volume commitments can help shippers dynamically route packages to the optimal carrier in near real-time. Likewise, invoice auditing platforms that reconcile bills against contracted rates and shipment data ensure accuracy and uncover cost-saving opportunities.
Combining different technology platforms - those focused on analytics, execution, and optimization - through partnerships can also help to provide end-to-end visibility and control over parcel shipping programs.
Embrace data and continuous improvement
Peak season will always present challenges, but shippers who invest in technology, leverage data-driven strategies, and build flexible, collaborative carrier relationships are best positioned to thrive. Peak volumes often expose underlying inefficiencies, making this the ideal time to treat shipping as a continuous improvement project. By proactively using real-time data to anticipate and respond to shifts rather than reacting after costs have already escalated - shippers can ensure not only a successful peak season, but also sustained improvements in efficiency and effectiveness year-round.
If you don’t already treat shipping as a continuous improvement project, then you should start doing so now. Leveraging real-time data to proactively anticipate and respond to shifts - rather than reacting after costs have already spiked - is the strategy for a successful peak season, and the key to improving the efficiency and effectiveness of your shipping operations year-round.
