FedEx Surcharges and Rate Hike: 5 Things You Need to Know

FedEx Surcharges and Rate Hike: 5 Things You Need to Know

As we begin to roll into the dwindling days of summer, preparations for increased shipping across major carriers has already begun. If previous years tell us anything, this holiday season will be another record-breaking year in terms of items shipped by major carriers.

Recently, FedEx made an announcement regarding increased rates for certain types of packages over the peak (holiday) season – from November 19th through December 24th. While FedEx has previously stated that they have no intentions to place surcharges on residential shipping, an announcement that was made only a few days ago, these surcharges are very specific and focused on over sized and unauthorized packages.

For the peak season, starting November 19th, FedEd will be implementing a peak season surcharge
on these 3 accessorials:

Additional Handling
This surcharge applies to U.S. Express package service, as well as international ground shipping. The amount of the surcharge will be $3.20 per package.

Ground Unauthorized Package
This surcharge will only apply to ground services, both U.S. and international. The surcharge amount will be $150.

This surcharge applies to U.S. express, as well as both U.S. and international ground. The surcharge amount will be $27.50

So, what does this mean for you?

  1. Surcharges on Top of Already Record-High Costs
  2. It’s been widely report that shipping costs are not only at the highest they’ve ever been but growing at a higher rate than ever before. Combine this with the additional surcharges that carriers like FedEx will be implementing over the holiday season, the potential impact on shippers will be all the more significant.

  3. Business Intelligence for Effective Planning
  4. With these new surcharges, it’s incredibly important for shippers to have access to deep and robust business intelligence and analytics. Leveraging such a system would allow for better planning of service-level options to minimize shipping costs.

    In addition, getting access to real-time transportation cost information, particularly during the peak season in which these surcharges will be applied, will enable shippers to quickly adapt to unexpected changes.

  5. You Need to Optimize Your Shipping Network
  6. With the prospect of even higher costs, shippers will be forced to find strategies for greater cost savings – shipping network optimization is one such strategy.

    Shipping network optimization should be focused on 3 strategic goals:

    1. Decreasing per package costs
    2. Lower customer wait time
    3. Redistribution of packages to optimal warehouses

    A shipping network strategy must take into account shipping profiles for different times of the year. Given the upcoming peak season surcharges, this will be of particular importance.

  7. Time to Renegotiate Your Carrier Contract
  8. When done correctly, a newly negotiated carrier contract could save your company up to 18% on shipping costs.

    There are 4 key steps to negotiating the optimal carrier contract:

    1. Analytical Assessment
    Perform an analytical assessment of your historical shipping data from the carrier’s perspective, providing your company with insights as to how carriers view your business.

    2. Validation of Key Performance Indicators
    Validate your key performance indicators (KPIs) and leverage our in-depth knowledge of the freight and transportation industry to determine the margin held by the carrier on your business, so you know how much room to maneuver is available in negotiating a new contract.

    3. Analysis of Costs
    Analyze and identify shipper’s existing costs and margins by service, weight, zone, and accessorial charges, and areas with inflated margins are explicitly targeted to improve contract specifications on our client’s behalf.

    4. Industry Benchmarking
    Benchmark drivers of customer cost and margins against similar businesses in the industry and use that information to develop carrier-specific RFPs, coach our clients through carrier QA, and help to examine initial and final proposals to determine the exact financial impact of revised carrier specifications.

  9. You’ll Need a Freight Audit Now More Than Ever
  10. Due to the increasingly complex nature of shipping, freight auditing has become more important than ever before. While FedEx made it quite clear that they will not be implementing residential surcharges, given the peak surcharges that will be implemented over the holiday season, a comprehensive freight audit – across all modes and regions – will be an effective way of mitigating the increased complex nature of shipping that will come with these seasonal surcharges.

Fuel Surcharges

Beyond holiday surcharges, it was reported that FedEx will be implementing new fuel surcharges come September. While exact details haven’t been released yet, it looks like it will be something along the lines of 1%.

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