FedEx Announces 2017 General Rate Increases and It Doesn’t Match UPS: What it means for you

Following an announcement made on September 1, 2016 by UPS, FedEx on September 19, 2016 has announced its 2017 General Rate Increases.  UPS’ rates will be increased effective December 26, 2016, while FedEx’ increased rates will become effective on January 2, 2017.  These increase announcements are an annual ritual for the Parcel Carrier Giants, and there are significant changes that you, the shipper need to be aware of to make the best decisions on your shipping moving forward.

This year’s announcement by FedEx brings a few surprises for its customers.  First and foremost, FedEx’ Express Package and Freight standard list rates will increase an average of 3.9% while UPS’ increase announcement indicated their list rates for these same services would increase by 4.9%.  For FedEx Ground and FedEx Home Delivery, the standard list rates will increase 4.9%, the same percentage increase UPS will take on their Ground Delivery charges.

There are other variables in these carrier’s rates when these increases are published and some of these changes will end up taking a big chunk of money out of many FedEx customer’s wallets, for example:

• FedEx will change the Dimensional Weight Divisor for Ground Shipments from the current factor of 166 to 139; back in 2010, the Dimensional Weight Divisor was 194. Here is an example of the impact this change alone can have on a shipper’s annual freight expense.  This is based on an actual shipper’s current and proposed costs.
• A 38 lb. Ground package shipped to Zone 6, with package dimensions of 34” x 16” x 13”
• With a dim factor of 166 the dimensional shipment weight would be 42.6 lbs., rated out at 43 lbs. for a total cost of $35.35.
• With the new dim factor of 139 this same shipment’s dimensional weight is now 50.8 lbs., rated out at 51 lbs. for a total cost of $38.56
• The total cost differential is $3.21 more than the previous cost, or 9% higher overall
• FedEx Freight has also increased its fee for Extreme Length Surcharge from $85.00 to $150.00. Not only that, this increase will be applied when the dimensions of the package are 12 feet and over compared to 15 feet and over which is the current calculation.  This change alone represents an increase of 57%.
• And another striking change will take effect on February 6, 2017, when FedEx will start adjusting its Fuel Surcharge percentage on a Weekly basis compared to their current adjustments which are on a monthly basis. We can’t help but wonder that FedEx may be thinking the days of low fuel prices may be coming to an end and they want to be in a position to jump on these increases weekly instead of having to wait as long as a month or more to make the adjustment.

If this sounds confusing, that’s because it is.  But have no fear, ICC Logistics has created List Rate Comparison Charts for both FedEx and UPS, comparing the 2016 Base Rates with the 2017 Base Rates to help you, the shipper, better understand how these rates will affect you and arm you with the best information to make decisions.  We also have created The Accessorial Rate Increase Comparison for 2016 vs 2017 which our clients find incredibly valuable.  You can request these charts on the ICC website at www.icclogistics.com.

It’s more important than ever for the shipper to have the knowledge it needs to make the best decisions on shipping. This confusing new reality comes with many variables to consider. But don’t worry, ICC is here to help. Contact one of our profitability specialists today to learn how we can help you navigate the “new normal”. We’re standing by at 516-822-1183.