FedEx Rolls out Rate Increases and New Fees

As we make our way into the final quarter of 2020, carriers are beginning to roll out their pricing for 2021. This week, FedEx announced its pricing for the upcoming year that included two important changes to keep an eye on.

Rate Increases

For 2021, FedEx will be introducing an average 4.9% rate increase on Ground, Express, and Home Delivery.

While this increase is not as substantial as some had expected, coupled with the continuously increasing surcharges, it will certainly have an impact on shippers.

What is unique about this increase is that the pricing will be weight-based - which will have a particular impact on eCommerce shipments. For shipments weighing 1-5lbs, the rate increase will be above 6%.

Late Fee

According to an announcement by FedEx this week:

Effective January 2021, we will begin charging a six percent (6%) late payment fee to U.S. FedEx Express and FedEx Ground customers who don't pay their invoice within their agreed upon payment terms. Details regarding the late fee can be found in the January 2021 FedEx Service Guide in the Fees and Additional

While UPS has a similar fee assessed after 14 days of non-payment, FedEx has generally been more lenient. However, given the unprecedented strain on the shipping industry we've seen in the wake of COVID-19, it's no surprise.

Some shippers may have calculated late fees as part of their cost of doing business, but with the ever-increasing prices that have been rolling out, plus the economic uncertainty that will likely remain for some time, a late fee like this becomes an additional stressor on shippers.

History of Price Increases During COVID-19

Since the outbreak of the COVID-19 pandemic, the shipping industry has been on a wild rollercoaster ride.

Some of the most consequential changes include:

UPS Holiday Peak Surcharge

Along with the standard peak surcharges, this year UPS is adding per package charges based on the percent over average weekly volume as compared with February 2020.

This change has huge implications for large shippers this holiday season.

Peak Period: November 15, 2020 to January 16, 2021

Service Level110%-200% of Feb Volume>200%-300%>300%SurePost$1.00 per package$2.00 per package$3.00 per packageGround Residential$1.00 per package$2.00 per package$3.00 per packageNext Day Air Residential$2.00 per package$3.00 per package$4.00 per packageAll Other Air Residential$2.00 per package$3.00 per package$4.00 per package

USPS Holiday Peak Surcharge

TheUnited States Postal Service announced increased surchargesacross commercial domestic channels that will be in place from October 18th through December 27th.

Introducing a holiday peak surcharge is unprecedented for USPS and comes as new Post Master General DeJoy has found himself in increasingly under fire.

Whereas UPS had announced its charges as a function of percentage volume over the average of Feb 2020, USPS is applying these charges across the board.

ProductCurrentPlanned IncreaseParcel Select Destination
Delivery Unit (DDU)Starts at $3.1924 centsParcel Return ServiceStarts at $3.0524 centsParcel Select LightweightStarts at $1.8124 centsFCPS CommercialStarts at $2.7425 centsPriority Mail CommercialStarts at $7.0240 centsParcel Select GroundStarts at $6.9240 centsParcel Select DSCFStarts at $4.3740 centsParcel Select DNDCStarts at $5.9840 centsPriority Mail Express CommercialStarts at $22.75$1.50

UPS Increases SurePost Prices to Match USPS

In addition to what had already been announced, UPS followed inincreasing their UPS SurePost rates $0.24 per package.

The increase mirrors that of USPS and goes into effect around 1 month prior to their UPS's Peak Surcharges.

Dealing With the "New Normal"

With all of the tumult and uncertainty surrounding shipping prices, shippers have no choice but to re-assess their supply chains

Most importantly, they need to gain full visibility over their shipping operations and find cost savings to mitigate the changes coming from carriers.

To learn more about gaining visibility over supply chains in the time of COVID-19, check out Intelligent Audit's recent eBook:

Shedding Light on Transportation Data in the Time of COVID