FedEx: Thanks for the business online sellers, now pay up!

December 15,2015
by Kristin Foster

The cost to ship goods to customers is going up – again. And FedEx says online sales are to blame!

The rapid growth of e-commerce has resulted in increased residential deliveries. The number of stops and starts is eating into delivery vehicle fuel consumption. According to FedEx, extra deliveries generated by online sales justify an increase in fuel surcharges for both ground and air-based shipments, even though fuel prices have dropped.

 

Beginning November 2, 2015 shippers without surcharge protection via a FedEx rate contract will be subjected to yet another round of fuel surcharges. Increases of 1.5% to 1.75% are expected for FedEx Express and International services. The fuel surcharge portion of ground shipping will rise more modestly, from .5% to 1%. The November 2015 FedEx surcharge charts are available HERE.

Didn’t they just do this?

Shippers may recall the surcharges rose by up to 4% only last February. At that time, FedEx intended to catch up with UPS which had been collecting higher surcharges from their customers, but UPS raised their rates at the same time. Some analysts believe the November increases are merely another FedEx attempt to catch up with UPS in the fee-collection department. Domination of the shipping business by just two companies provides them both with a great deal of flexibility when it comes to pricing.

With fuel prices low, the impact from the surcharge adjustments won’t represent a drastic price hike immediately. As prices fluctuate though, the impact on shippers will be more noticeable. Online retailers offering free shipping should remain vigilant about the impact of fuel on shipping costs and adjust their product prices accordingly.

“Unauthorized Packages” Can Cost Plenty

Also changing on November 2 will be surcharges for what FedEx calls “unauthorized packages” shipped via UPS Ground. Unauthorized packages exceed 108 inches in length, are more than 165 inches in length and girth combined, or weigh greater than 150 pounds. The surcharge fee will swell from $57.50 to $110.00 – a whopping 91% increase. Merchants selling large or heavy merchandise will obviously want to be aware of their product weights and dimensions.

You knew it was coming…

On January 4, 2016, rates at FedEx Ground, FedEx Express, and FedEx Freight will be climbing an average of 4.9%. General rate increases (GRI) have become an expected annual occurrence. As in the past, shippers should analyze their own package types, sizes, and services to determine the impact of the 2016 GRI on their particular businesses. Many services and package weight classes will experience increases greater than 4.9%. See the 2016 FedEx Rate Charts.

Non-fuel surcharges and handling fees will be increasing in January as well, some by double-digit percentages.  See the 2016 FedEx Surcharges and Fees Chart.

In the past, UPS and FedEx have announced similar rate increases around the same time. Online sellers should expect an announcement from UPS concerning their new prices, perhaps effective before the end of the year.

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