FedEx is introducing, but not widely advertising, a series of new charges and fees over the next two weeks that could catch customers by surprise, building on a recent pricing strategy aimed at boosting revenue without touching base rates that shippers tend to focus on.
Over an 18-month span, FedEx (NASDAQ: FDX) has implemented or announced more than 50 pricing changes, according to parcel spend management firm LJM. On top of three general rate increases have been fuel surcharge adjustments, five changes to One Rate (a flat-rate, upfront shipping program designed to provide simplicity and predictability), delivery area surcharge updates, customs-related fees, dimensional pricing changes, peak surcharges and demand surcharges.
The surcharges are typically less visible to freight owners than base rates and can have a large impact on transportation budgets.
Shippers have experienced a significant increase in fuel surcharges from FedEx, UPS and even the U.S. Postal Service as the Iran war limited crude oil supplies, pushing up the cost of diesel and jet fuel used to power their fleets, as the TD Cowen/AFS Logistics Freight Index quantified last week. Fuel surcharges in the second quarter were two-thirds higher than the prior year. Overall, the express parcel rate per package increased 5.9% in the second quarter, while the ground parcel rate per package grew 5.2%.
"The biggest takeaway is not just that FedEx is raising rates on a continual basis, but how those increases have been distributed. Many shippers now see accessorial charges in the high-30% to low-40% range as a share of spend, with some exceeding 50%, LJM said in an article on its website. The constant micro-adjustments mean businesses should review their contracts more than once a year, it added.
On Monday, FedEx reclassified its zip code list for delivery and pickup area surcharges, pushing some zip codes into pricier tiers and making other zip codes surcharge-eligible for the first time. The result is that 102 zip codes were added to the standard delivery area surcharge tier, 74 moved from standard to extended area and 63 moved from extended to remote area — the highest cost tier. Shippers with packages destined to or picked up from any of the reclassified zip codes are now subject to higher per-package surcharge costs.
For delivery area surcharges, the move from extended to remote represents an increase of $11.20 per package for commercial shipments and $7.95 per package for residential shipments. Lower tiers received more modest increases. For pickup area surcharges, the extended-to-remote promotion adds $7.20 per stop.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
