Just under two weeks ago, UPS announced surcharges that will be applied to all types of deliveries company wide. FedEx has now announced their plans to follow suit with some slight differences. On June 3, FedEx announced that they will be rolling out several surcharges on deliveries that are to take effect on Monday, June 8th following fallout as a result of COVID-19.
Though there are some similarities, this does not appear to be a move made in order to compete with UPS. Both carriers have made the decision to raise their rates to shippers, meaning that shippers will have to either absorb or pass on the extra charges in an already distressed environment. The fallout is likely to be similar for both companies, and FedEx has implemented some slightly different standards.
These surcharges are going to impact each shipping company differently, and follow a few different guidelines. There will be a surcharge of $30 per package on oversized deliveries during peak shipping and delivery times, which comes in just slightly lower than UPS who is charging $31-45 per oversized package. These include packages that exceed 96 inches in length or 130 inches in length and girth combined.
The second surcharge is a peak residential delivery charge of $0.30 per package. However, this only applies to customers that FedEx refers to as “enterprise level” which means they meet the following criteria. The first requires that in any given week, they ship 40,000 parcels through FedEx Express residential and FedEx Ground residential, excluding SmartPost and FedEx One, this is vastly different from the 25,000 parcels criteria used by UPS. The second requires that their volume in that week is more than 120% of their average weekly volume from February.
Finally, a temporary surcharge of $0.40 per package has been placed on FedEx SmartPost packages. The company chose to in-source SmartPost in an attempt to save costs back in March. Theoretically, SmartPost volume is going to add density to FedEx ground. However, the SmartPost surcharge could potentially put shippers, who rely on that service, in a bit of a tough position. This is because SmartPost is FedEx’s most economical service, and a $0.40 surcharge represents a more substantial increase as a share of total parcel shipping spend. Some shippers may be forced to look elsewhere for carriers more within budget, as many have been hit hard by COVID-19.
FedEx representatives explained, “As the impact of the virus continues to generate a surge in residential deliveries and has also generated a surge in oversize, hard-to-handle packages, we have experienced increased operating costs across our network.” They stated that in order “to continue providing our customers with strong levels of service during this time, we are implementing temporary peak surcharges,” arguing that what they are providing is allowing essential businesses to keep ecommerce moving and delivering shipments that may be critical during this challenging time brought on by COVID-19.