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FedEx Corp has announced their General Rate Increases for 2020 for all of their business units, FedEx Express, FedEx Ground and FedEx Freight. These rate increases will become effective on January 6, 2020. Last year, FedEx did not announce their General Rate Increase until November 5th, which didn’t leave much time for shippers to budget for these increases. This year there is plenty of time for budgeting and we strongly suggest that each and every FedEx shipper plan exactly how they are going to pay for these increases.
The increase announcement comes at virtually the same time FedEx Corp announced that its fiscal first quarter profits fell 11% on soft revenues, especially in their Express operations as reported by the Wall Street Journal. The company has said that it plans to ground at least 27 older freighters to reduce operating costs due to lower demand for their Express services which the company sees continuing into 2020. FedEx CEO, Frederick Smith, told investment analysts recently “the global macro economy continues to soften, and we are taking steps to reduce capacity.”
While FedEx has seen a reduction in quarterly profits, and a slowdown in demand for its Express services, we need to remind everyone that these General Rate Increases are published each and every year for implementation at the beginning of the New Year. And, these increases are implemented regardless of whether or not the carriers are struggling financially or making a profit. The only variable is the overall “Average Percentage Increase” of the General Rate Increase. Last year FedEx published a 4.9% “Average Increase” and they have announced this year’s increase will be exactly the same, 4.9% on “Average.”
The use of the word “Average” is critical in our reporting as with any averaging, some services will see a smaller increase than 4.9% and some services will receive an increase of more than 4.9%. To highlight these increases, each and every year we publish for both FedEx and UPS, Rate Comparison Charts showing the exact percentage of increase for various services and this year is no exception. Here are some examples of the variances in “ACTUAL” versus “AVERAGE” increase percentages for FedEx Express and Ground Surcharges, Fees and Shipping Services:
SURCHARGE OR FEE “ACTUAL” PERCENTAGE INCREASES:
Additional Handling Fees based on Dimensions – 11.1%
Additional Handling Fees based on Weight – 20.0%
Address Correction Fee – 6.3%
Delivery Area Surcharge – Home Delivery – 9.6%
Extended Delivery Area Surcharge – Ground Commercial – 27.8%
Extended Delivery Area Surcharge – Ground Express – 26.3%
Residential Air and Residential Ground Surcharge – 5.7%
Extended Service Area Pick up or Delivery Surcharge – 25%
Ground Unauthorized Package Charge – 29.6%
BASE RATE “ACTUAL” PERCENTAGE INCREASES:
Ground One Pound Package, zones 3 through 8 – 4.3%
Ground Five Pound Package, zones 2 through 8 – 5.3%
Priority Packages for All Weights and Zones, 3.9% to 6.9%
Standard Overnight for All Weights and Zones, 3.9% to 6.9%
2 Day Service for All Weights and Zones, 4.9% to 6.9%
Express Saver for All Weights and Zones, 4.9% to 7.9%
To receive copies of our FedEx Rate and Surcharge 2019 vs. 2020 Comparison Charts, click here and fill out the attached form and we will send you your very own copy. As soon as UPS announces their 2020 General Rate Increase, we will create the same comparison charts and provide them upon request.
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