September 23rd, 2015
Yes, you read the title correctly. Effective November 2nd, 2015 FedEx has announced an additional increase to their already increased rates from February 2015.
The increase for FedEx Express and FedEx Ground fuel surcharges will result in Express and International fuel surcharge increases of 1.5 percent to 1.75 percent and Ground fuel surcharge increases of 0.5 percent to 1.0 percent.
While UPS has always had an advantage in the Fuel Surcharge arena, the increase made in February was an effort to get on an equal playing field. UPS also increased fuel surcharge rates in February resulting in significantly higher fees collected this year over FedEx. Therefore, this move by FedEx comes to once again get on the heels of UPS when it comes to fuel surcharge rates.
Assuming UPS does not make a move to change their current fuel surcharge rates, FedEx will have a slight advantage over UPS when fuel rates are lower. However, should rates exceed $1.50 for jet fuel and $2.84 or higher for diesel the rates will essentially match.
FedEx strategically announced this increase while rates are lower to still show to customers a lower rate when compared to UPS. Keep in mind that historically FedEx would announce a reduction in Fuel Surcharge rates in conjunction with a GRI (General Rate Increase) to offset the impact but, in this case they have announced an increase for both within a matter of weeks from each other. Pricing strategy change!
Should FedEx not have made this change, Express and International shippers would not have received any fuel surcharge given current rates.
*FedEx Ground Charge for Unauthorized Packages
The charge for unauthorized packages will increase from $57.50 per package to $110 per package. These packages are unauthorized, may be refused or returned to the shipper and will be delivered at the option of FedEx Ground. The charge is assessed for the following conditions:
- Any package measuring more than 108 inches in length.
- Any package measuring more than 165 inches in length and girth combined.
- Any package weighing more than 150 lbs.
One final increase to note is in regards to SmartPost shipments. FedEx is also more than doubling the Delivery Area Surcharge for FedEx SmartPost packages in 2016. See outline below:
These increases will affect all FedEx customers unless a specific fuel surcharge table is part of their contract. The new FedEx fuel surcharge tables are available for viewing at http://www.fedex.com/us/services/fuelsurcharge-2015.html.
We saw a record breaking increase last year with the implementation of dim weight pricing by both carriers and based on the rumblings thus far 2016 does not seem to be any better. Be sure to get a jump on your 2016 planning and negotiating.
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