FedEx Responds to the UPS Rate Increase with what may be the Largest Rate Increase to Date

It took one week for FedEx to one-up UPS in the rate increase game.  Citing increased demand domestically to residential deliveries, FedEx followed UPS’ lead with announcing a COVID-induced surcharge to SmartPost packages, oversize packages and peak residential surcharges to high volume shippers[1].  With a notable increase, FedEx added 33% more in surcharge fees than UPS, charging $0.40 extra per SmartPost package compared to $0.30 for UPS Ground and UPS SurePost.

Now that both FedEx and UPS have applied surcharges to domestic shipments, this can have a critical and immediate economic impact on e-commerce shippers struggling to adjust to a post-COVID environment. 

Josh Dunham, co-Founder of Reveel, warned high-volume shipping organizations to take action. “As UPS and FedEx continue to make moves to preserve profit margins, shippers should push back and renegotiate contract terms and pricing bands.  Although the carriers continue to capitalize on the economic uncertainty by passing the buck with pricing increases to shippers, there may be other ways of negotiating a better outcome.”

FedEx and UPS Domestic Surcharges Overview:

• On May 26,2020 UPS announced domestic peak surcharges on shipments in the U.S. beginning May 31, 2020.  On June 3, 2020 FedEx follows with a similar, higher priced surcharge beginning June 8, 2020. 
• UPS imposed a large parcel surcharge of $31.45 per package: announced on May 26 to be effective May 31, 2020. FedEx also imposed a $30.00 fee to oversize charge to Express and Ground packages effective on June 8, 2020 (Announced June 3, 2020).
• Both FedEx and UPS added a $0.30 surcharge to high volume shippers that exceed average residential packages shipped in February 2020 (FedEx announced July 3, 2020. UPS announced May 26, 2020). 

Source: https://www.fedex.com/en-us/shipping/current-rates/surcharges-and-fees.html#peak-surcharge

[1] Applies to FedEx customers at the enterprise level who (1) within a given week, ship 40,000 FedEx Express residential and FedEx Ground residential packages combined (excluding FedEx SmartPost and FedEx One Rate®); and (2) whose volume in that same week exceeds 120% of their average weekly volume in February 2020.

The Reveel App uses AI and machine learning to provide an unparalleled look into what’s impacting your bottom line. Through invoice audits, peer benchmarking, and rate modeling/simulations, you can see the health of your operation and assess pricing changes from parcel carriers like FedEx and UPS. Sign up for a free Reveel account today to see how you can leverage automation to synthesize your data, ship more for less, and reduce the time needed to identify issues and action items.