But there’s a new ‘normal’

On May 21, FedEx released a statement announcing new peak surcharges and fees for U.S. Express and Ground services and Ground International services. The website states, “FedEx has kept commerce moving and delivered critical shipments throughout the COVID-19 pandemic. The impact of the virus continues to generate elevated volumes, high demand for capacity and increased operating costs across our network.” They go on to say that the company is imposing these new surcharge increases “to provide our customers with the best possible service during this challenging time.”

FedEx’s new (and improved) peak surcharges and fees going into effect on June 21, 2021

Peak — Residential Delivery Charge 

Beginning June 21, FedEx is imposing a 100% rate increase on FedEx Express and FedEx Ground U.S. domestic residential packages (excluding FedEx Ground Economy and FedEx One Rate® packages), bringing their surcharge from $.30 to $.60 per package. This surcharge will apply to all businesses that ship more than 30,000 packages per week, and according to their site, “Any contracted discount or cap the customer may have on the Residential Delivery Charge will not apply to the Peak.”

Peak Surcharge – Ground Economy (formerly SurePost)

For customers who utilize the contract-only FedEx Ground® Economy package services, peak surcharges will increase from $.75 to $1.00. 

Peak — Additional Handling Surcharge

Beginning June 21, FedEx is increasing its surcharge on packages that need additional handling from $3.00 to $3.50. This surcharge applies to any package that meets the weight, packaging, or dimension requirements in the FedEx Service Guide for U.S. Express Package Services, U.S. Ground Services, and International Ground Service. 

These three new surcharges and fees come on the heels of the January 18 Peak Oversize Charge. At that time, the carrier imposed a $30 per package fee on all oversized packages being shipped through U.S. Express Package Services, U.S. Ground Services, and International Ground Service.

And lest we forget…

Also on June 21st, FedEx is updating (i.e. increasing) its fuel surcharge matrix. So now, not only does the fuel surcharge increase as the cost of fuel increases, but now the baseline used to calculate the surcharge is likewise increasing by a full percentage point. To put this into perspective – a $3.20 price per gallon will still cost FedEx $3.20, but it’s going to cost you 9% over and above your shipping charges instead of the current 8%. I’ve said it before – “It’s distilling money.” This isn’t the first time they’ve done this, and FedEx by no means has a monopoly on moving the goalposts. In other words, look for the same from UPS.

Year-round Peak?

Surcharges appear to be here for the long haul. In FedEx’s March 2021 Q3 earnings call, Brie Carere, Executive Vice President, Chief Marketing & Communications Officer, shared, “As we plan for peak of fiscal year 2022, our peak surcharges will continue to play a critical role.” She continued, “With e-commerce driving significant growth internationally, we will increasingly utilize peak surcharges in our international business.”

With no end in sight for these new surcharges, what can you do to protect your bottom line? Here are a few things we suggest: 

• Pay attention to your shipping volume. Can you offload a portion of your shipments to the USPS, or regional carrier(s) in order to stay beneath the volume thresholds? 
• Rule #1 – All things are negotiable. The team at ShipRx has negotiated thousands of contracts and has even written contracts for carriers. Trust us to secure the best possible rates for your business. 
• Don’t pay for incorrectly assessed charges. ShipRx will provide an audit with no upfront fees to help you recover refunds and credits owed due to service failures and incorrect charges.

The team at ShipRx is looking forward to helping you combat rising surcharges and fees with audits and negotiations. Get in touch with us today, and let’s get started!

James Founding Partner