Fedex announces surcharges for holiday season shipping
Fedex will have surcharges on certain home deliveries and packages it hands off to the U.S. Postal Service during the holiday shipping season, the company announced Tuesday.
Fedex is implementing the surcharges and fees to “continue providing our customers with the best possible service during this challenging time,” the company said on its website.
“As the impact of the virus continues to generate a surge in residential deliveries, we are entering this holiday peak season with extremely high demand for capacity and are experiencing increased operating costs across our network,” Fedex said. “We anticipate residential volume to continue to surge into the new year.”
Fedex’s residential delivery charge on certain U.S. Express and U.S. Ground services runs from Nov. 2 to Jan. 17, 2021. To be charged, a Fedex shipping customer must reach a certain package volume threshold.
“The scope of a customer’s volume shall be determined by Fedex in its sole discretion,” the company said on its website.
According to Fedex, customers shipping more than 35,000 packages on average per week during periods in October and November will see charges apply later in the year. Customers who qualify will be notified prior to the effective date.
The amount depends on how much more the customer was shipping compared to what they were from Feb. 3 to March 1. Fedex’s website says residential shipments could see a per-package charge of $1 to $5, depending on how much more the customer is shipping.
Surcharge for Postal Service handoff
Fedex Smartpost, the home delivery service in which Fedex hands off shipments to the Postal Service for the final stretch, will see a $1 per package surcharge from Nov. 2 to Nov. 29. That surcharge increases to $2 per package from Nov. 30 to Dec. 6, and back down to $1 per package from Dec. 7 to Jan. 17, 2021.
The Smartpost surcharge not requiring a certain volume threshold makes “a big difference in who will get hit with those fees,” said John Haber, CEO of transportation spend consultancy Spend Management Experts. Smartpost is best suited for smaller businesses shipping lightweight packages, as shipment platform Shippingeasy notes.
Fedex is in the midst of insourcing nearly 2 million packages daily it would have originally handed off to the Postal Service via Smartpost, with executives saying it will help the company’s delivery efficiency.
Like previous years, hard-to-handle, oversized or unauthorized shipments will see surcharges during what Fedex considers peak season. The surcharge period runs from Oct. 5 to Jan. 17, 2021.
Fedex did not apply a residential holiday surcharge for three consecutive years prior to 2020, with bulky and hard-to-handle shipments being the exception.
Surcharges follow volume spike
Fedex currently has surcharges for applicable home delivery and Smartpost shipments in place until Nov. 1, as the Memphis logistics giant deals with a flood of packages.
As more people stay at home and order online during the pandemic, Fedex Ground delivery contractors have been operating at full speed for months.
In Fedex’s most recently reported quarter, Ground’s average daily package volume jumped 25% from the year before. Soon, Fedex workers will be handling a new surge of packages as people order gifts for the holidays.
Rival UPS and the U.S. Postal Service recently announced peak season surcharges of their own.
The Postal Service’s planned price hike still needs to undergo Postal Regulatory Commission review. One of UPS’ peak surcharges applies to certain U.S. packages for customers who ship more than 25,000 packages per week during the peak period.
“Fedex’s announcement was not surprising and follows UPS and USPS’ peak surcharge announcements which further adds to the pain that many retailers are experiencing,” said Chase Flashman, CEO of supply chain data analytics company Shipsights. “The surcharges are about what was expected and follow closely with UPS’ announcement including lasting into January.”