Volume during COVID-19 forces Fedex surcharge
US online shopping orders spike e-commerce, traditional retailers
Fedex is fulfilling more home deliveries as the coronavirus keeps more people at home.
Fedex is adding surcharges for some shipments within the U.S. starting Monday, as the COVID-19 pandemic continues to fuel an online shopping spike on par with the holidays.
The temporary surcharges, which do not have an end date yet, include: $0.30 per package for Fedex Express and Fedex Ground home deliveries, $30 per oversized package shipped via Express or Ground and $0.40 for Fedex Smartpost packages. Smartpost uses the U.S. Postal Service to complete the delivery.
The home delivery surcharge applies to larger Fedex customers experiencing volume spikes. Specifically, it applies if the customer ships more than 40,000 residential packages via Express and Ground in a week and “exceeds 120% of their average weekly volume in February 2020,” Fedex said on its website.
The surcharges are necessary to “continue providing our customers with strong levels of service,” the Memphis-based logistics giant said.
“As the impact of the virus continues to generate a surge in residential deliveries and has also generated a surge in oversize, hard-to-handle packages, we have experienced increased operating costs across our network,” Fedex said.
Fedex is fulfilling more home deliveries as the coronavirus keeps more people at home. U.S. online shopping orders are up 116.8% and 83.1% for ecommerce companies and traditional retailers, respectively, this past week compared to the same week in 2019, per data from marketing company Emarsys and analytics company Gooddata.
In May, Fedex Ground delivery contractors said they were dealing with a spike in packages and searching for more drivers as volume exceeds what they saw during the holidays, known as the “peak season” for delivery companies.
Fedex also adds surcharges for certain shipments during the peak season, but for three consecutive years the company has not implemented one for home deliveries during that time. Hard-to-handle, oversize and unauthorized shipments have been exceptions to that rule.
The surcharge notice follows rival UPS’ installation May 31 of a $0.30 surcharge for certain U.S. home deliveries, along with a large package surcharge. The company cited the coronavirus in its implementation of the surcharges.
While home delivery volumes are up, Fedex has seen a decline in its more profitable business-to-business shipments amid COVID-19 lockdown measures, Chairman and CEO Fred Smith said in May.
“In simple terms, the carrier’s good business is down, and bad business is up,” wrote Logistics Trends and Insights’ Dean Maciuba, a former Fedex employee, on Linkedin. “This condition cannot be sustained without implementing major price increases to support that ugly, e-commerce driven home delivery, which further compromises the e-commerce value proposition.”
Fedex had already added a temporary surcharge on Fedex Express and TNT international shipments starting April 6, with the company noting COVID-19 disrupting supply chains and causing a squeeze in air cargo capacity. John Haber, CEO of transportation spend consultancy Spend Management Experts, said earlier this year that larger Fedex customers will feel that surcharge’s effects more than smaller ones.
Some of those surcharges have risen in cost since first being implemented. Freight shipments from China to other countries began with a $0.45 per pound surcharge on April 6 and climbed to $1.60 per pound on May 25.
Max Garland covers Fedex, logistics and health care for The Commercial Appeal. Reach him at max.garland@commercialappeal.com or 901-5292651 and on Twitter @Maxgarlandtypes.