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FedEx sets earlier start date for peak delivery surcharges

Surcharges to start Sept. 5

FedEx buys large share bloc from Morgan Stanley (Photo: Jim Allen/FreightWaves)

FedEx Corp. will begin imposing 2022 peak-season surcharges on Labor Day and will apply certain ones based on weekly calculations that begin around mid-October and run until early December.

In a complex and detailed table published Friday on the company’s website, FedEx (NYSE: FDX) said that surcharges for the “additional handling” of domestic express and ground parcels, as well as for international ground service, will kick in on Sept. 5. The first cycle of surcharges ends Oct. 2.

FedEx will charge $3.45 per package during the first surcharge cycle. The second round of surcharges, which will be more costly at $6.55 per package , will begin Oct. 3 and run until Jan. 15, FedEx said.

The same schedule will apply for surcharges on oversized shipments, those that exceed FedEx’s dimensional requirements, the company said. FedEx will levy a $39.50 per-parcel surcharge during the first cycle, and a $68.75 surcharge during the second cycle.

Additional handling charges are imposed when a package does not conform to FedEx’s processing profile and must be handled differently than others. 

In the past, FedEx’s peak surcharges began in October. The earlier start date reflects the  growing relevance of delivery surcharges to the company’s year-round financial performance, according to an industry source.

Peak surcharges for FedEx’s “Ground Economy” service, which cover low-priced, non-time-sensitive shipments, will have three cycles. Under the first cycle, running from Oct. 31 to Nov. 27, the per-package surcharge will be $1.50. The levy will increase to $2.50 per package starting Nov. 28 and running until Dec. 11. The third cycle, where the surcharge drops back to $1.50 per parcel, begins Dec. 12 and runs until Jan. 15.

Surcharges for FedEx’s peak residential deliveries, which cover the bulk of its holiday traffic, will adjust each week starting Oct. 10. This differs from the company’s prior peak-season formats that did not include weekly adjustments. It is unclear why FedEx shifted to a different formula for the 2022 peak season.

As in the past, the level of surcharges will be based on a shipper’s peak volumes compared to its weekly volumes from a prior period. This peak season, the surcharge calculation will be based on the weekly average residential and Ground Economy packages shipped between June 6 and July 3.

In 2021, the calculation was based on parcel-shipping activity during February 2020, the last normal month of package delivery activity before the pandemic sent delivery volumes soarding.

Per-package surcharges on shipments handled by FedEx Ground, the company’s ground-delivery service, will range from $1.25 to $6 depending on the amount of applicable holiday volumes. For FedEx Express, FedEx’s air and international unit, the levies will range between $2.25 and $7 per parcel.

Residential delivery surcharges will begin Oct. 31 and run until Jan. 15. There will be a two-week lag between the week that shipping activity is calculated and the dates that the surcharges are applied, FedEx said.

Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.