FedEx Corp. (NYSE: FDX) said today it impose low to mid-range general rate increases for 2019 on its U.S. domestic shipping services and will also increase its fees on 56 “accessorials,” services that go beyond a traditional line-haul move.
Effective Jan. 7, so-called list rates for FedEx Express and FedEx Ground services will rise 4.9 percent, while prices for shipments moving via its less-than-truckload unit, FedEx Freight, will climb by 5.9 percent. For shipments moving via FedEx Express, the company’s air and international unit, the increases will apply to domestic U.S., U.S. import, and U.S. export services.
Rates for shipments moving via “SmartPost,” a partnership with the U.S. Postal Service where FedEx shipments are inducted deep into the postal delivery network for last-mile deliveries to residences, will also increase, FedEx said. The company did not disclose the magnitude of SmartPost increases in today’s announcement. Rival UPS Inc.—which has yet to disclose its 2019 rate adjustments—has a similar relationship with the Post Office. USPS, which calls its service “Parcel Select,” performs the same function for various partners such as parcel consolidators.
The service is popular with businesses and providers because it is priced cheaply and because it relies on USPS’ universal service network, partners can offer last-mile deliveries without using their own assets.
The rate increases apply to shipments not moving under contract with FedEx. The impending list price increases are consistent with the increases taken in recent years. Contract rates fluctuate in a narrower band as big customers leverage their volumes to mitigate any increases. The higher LTL rates reflect the continued strong pricing power exhibited by carriers across the board.
Also on Jan. 7, fees will rise on 36 accessorial services imposed by FedEx Express and FedEx Ground, and an additional 20 at FedEx Freight. For example, FedEx Express and Ground will hike a surcharge for “additional handling’ to $13.50 from $12.00 per package, based on its dimensions. The charge for address corrections performed by either of the two units will increase by $1 per transaction to $16.
Although the individual increases are minor, their cumulative impact can become costly, and are treated by regular customers as a nuisance and an inconvenience. The number of accessorial fees imposed by FedEx and UPS have risen consIndividually over the year.
For the second straight year, FedEx will not impose per-package residential delivery charges on traffic moved during the peak shipping season, which at FedEx begins Nov. 19. FedEx will apply a $3.20 surcharge to U.S. express and U.S. and international ground shipments that require additional handling, a $150 per-package surcharge on “unauthorized” packages, or shipments with such outsized weight or dimensions that the company may refuse to handle them, and a $27.50 per package surcharge on “oversize” packages, items not as outsized and somewhat easier for the FedEx system to handle. The company imposed surcharges on the same services during the last peak.
The “unauthorized package” surcharge comes in the wake of a $300 increase in charge for the service during the 2017 peak cycle.
Last year, Memphis-based FedEx chose not to impose any surcharges on the standard small-parcel deliveries its infrastructure is essentially built to handle. Instead, it focused on “large format” items that are not conveyable, may require extra or special handling, or both. Delivery demand for those items is rising rapidly as retailers expand the stock-keeping units available for online purchases. As a result, FedEx was able to capture increased ancillary revenue from moving the large-format traffic