On September 16, 2019, one day before the company announced its quarterly earnings, FedEx announced several shipping-rate and surcharge increases for the coming year. While these changes are in line with normal annual changes to pricing across all carriers, this announcement comes on the heels of drastic changes in the shipping space.
The important information regarding FedEx’s 2020 rate and surcharge changes is as follows:
|Service||Avg Rate Increase|
|Domestic and Export/Import||4.9%|
|Ground and Home Delivery Shipping||4.9%|
|U.S. Freight & Contiguous U.S. to Canada Shipping||5.9%|
In addition, FedEx will make the following increases as well:
- Increase in International Premium rates
- Increase in Minimum rates for FedEx Express services
- Increase in Ground Multiweight rates
- Increase in SmartPost rates
|Delivery Area Surcharge|
|Express – COM||8.77%|
|Express – EX COM||26.32%|
|Express – RES||4.76%|
|Express – EX RES||16.13%|
|Ground – EX COM||9.26%|
|Home Delivery – RES||9.59%|
Other Changes in the Carrier Space
Though a relatively normal occurrence, these increases follow a slew of big changes for the top carriers. The changes are, by and large, spurred on by changes in the relationship between traditional carriers and Amazon.
In May, an important decision was upheld by the Supreme Court allowing the United States Government to continue to determine the price USPS can charge for deliveries. The case was brought by one of their biggest rivals, UPS.
However, it was really all about Amazon – as they are USPS’s biggest customer and arguably the greatest beneficiary of the artificially low prices that they set. Amazon has for some time been slowly building its own delivery business, with clear plans to eventually enter the space in force. The outcome of this court battle could have significant implications for their long-term strategy and the delivery business as a whole.
Then, earlier this Summer both FedEx and UPS announced that they were expanding their shipping service to include Sundays. In addition, FedEx announced that it would no longer provide Amazon with its FedEx Express Air services. Not long after, rumors spread (though were denied) that FedEx was planning on dropping prices for its Air Express service to potentially fill in the gaps left by the departure of Amazon.
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