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How Will Fedex 2020 Rate Increase Affect Your Company?

Sep 19, 2019 · 3 minutes read

How Will These Increases affect you?

While each of Fedex parcel networks will have the same increase on average, 4.9%, the true impact will vary from shipper to shipper. The 4.9% average increase does not stay consistent for every service level and shipment zone, and changes in surcharge cost and rating will have a much more significant effect on certain shippers. Depending on factors of a companies shipping profile, many will see an increase in costs much larger than the stated averages. Some cost areas that will be subject so a significantly above average increase are:

Long Zone Shipments:

While each Fedex network will have an average increase of 4.9% that figure doesn’t stay constant across different service levels or zones. Increases are weighted significantly towards long zone shipments, especially in the Express network. Shippers using a high volume of long zone express shipments can expect costs to increase in the range of 6-8% for those services.

Service Level:

As increases will not stay consistent across different zones neither will they consistent across different service levels. Rate increases on 2-Day and 3-Day Express shipments will increase the most significantly relative to the 4.9 average increase, with 2-Day costs increasing an average of 5.55% and 3-Day by 7.1%.

Large Shipments:

Fedex continues its trend of trying to push large packages out of its parcel networks with this years increase. Shippers of large, bulky and heavy packages will be the most drastically affected by increased costs on two fronts. There will be an aggressive increase of both additional handling surcharges (11.11% by dimension, 20% by weight, 8.33% by package) and oversize charge (11.11% for Express and Ground, 33.33% for home delivery).

In addition to the price increase, on January 20, 2020 a more strict surcharge rating will be applied, reducing the weight threshold for additional handling surcharges from 70 pounds to 50 pounds. Also, beginning January 20th, fuel surcharges will be applied to oversized and additional handling charges.

Delivery Area Surcharges:

Delivery Area and Extended Delivery Area surcharges will also be increased much more aggressively than the 4.9% average. Delivery area surcharges will be increased up to 16.7% and Extended Delivery Area Surcharges will undergo as much as a 27.8% increase. For more information on which zip codes will be affected by this increase visit Fedex here.

Residential Surcharges:

Shippers doing a high volume of residential deliveries will also see a cost increase above the average. Residential Delivery Surcharges will see a 5.26% increase for the Home Delivery network and a 5.68% increase for Express and Ground. It should also be noted that shippers sending packages to residential addresses through Express and Ground networks are already being hit with higher surcharges, this increase will make it even more important to use the proper delivery network for residential packages.

In Conclusion

While rates are increasing an average of 4.9% for Fedex’s parcel delivery networks, most shippers will probably see costs increased by a slightly higher figure. Shippers who make a lot of long zone express shipments, ship heavy or large items, or ship to home addresses will see the largest impact on their bottom line.

As always, rate increases shouldn’t be taken at face value. The actual effect of the increase in costs can vary drastically from company to company. For a complimentary personal evaluation of how your company will be affected by this increase send inquiries to [email protected]

James Founding Partner