The Hidden Charges in the FedEx Rate Increase

ICC Breaks Down the Monday FedEx Rate Increase Announcement 

This past Monday, November 6, 2018, FedEx dropped the first shoe by announcing their 2019 Parcel General Rate Increases.  The second shoe to be dropped this year will be from UPS announcing their 2019 General Rate Increases for parcel shipments, which by the way we expect to see any day now.  Over the years, these two parcel giants have traded positions on who announces first and which company will play “follow the leader”.

FedEx in announcing their General Rate Increase for parcel shipments stated that the 2019 increases represents “an average” increase of 4.9%.  While that may be true, the amount of increase specific parcel shippers will absorb can be quite different.

For example, if you’re a FedEx Ground shipper and you ship 1 Pound Packages consistently to Zone three, (hold on to your hats), your rates will actually be reduced by an average of 1.6%.  That may not be much, but in the world of parcel shipping it is extremely rare for your rates to go down when these General Rate Increases are announced.

On the other hand, if you ship packages in FedEx’ 2 Day service to Zone 2, and your packages weigh 10 pounds, you will be absorbing not a 4.9% increase, but rather a 6.4% increase for those packages.

Now as if that’s not enough of a variance in the General Rate Increase announcement, there is another component to parcel shippers overall parcel freight costs that is often overlooked.  That area is what the Parcel Carriers refer to as Surcharges and Additional Fees.  These Surcharges are ancillary charges applied to every shipment based on any number of package characteristics.  For one thing, ALL packages are subject to Fuel Surcharges.  While you would think that the base rates would include a “Fuel Factor”, (and they probably do), all carriers, Parcel, LTL and Truckload, for that matter also add additional Fuel Surcharges onto their base rates.  Could this be referred to as “Double Dipping”, we think so!

Adding to the Surcharge and Additional Fees impact on parcel shipping costs are over 40 “Common” surcharges the Parcel Carriers assess additional fees on, such items as Additional Handling Fees, Oversize Package Fees, Address Correction Fees, Inside Delivery Fees, just to name a few.  So what are the increases FedEx shippers will be required to pay starting on January 7, 2019 for these fees.

• Additional Handling – 12.5%
• Oversize Charge – 12.5%
• Address Correction Fees – 6.7%
• Inside Delivery Fees – 6.1%

This all sounds so complex and it certainly can be for those companies that do not have the ability to comprehensively analyze all of the Rates, Surcharges and Additional Fees they are subject to.  But don’t fret we have taken the initiative and have created Comparison Rate Charts of FedEx’ List Rates as well as for all of their “Common” Surcharges and Additional Fees.  We will be creating the same comparison charts as soon as we know the increase percentages that UPS will be announcing as their 2019 General Rate Increase.  If you would like a copy of these charts, please e-mail anuzio@icclogistics.com and we’ll get them to you pronto.

Also, if you think it’s time for your company to take a good and long hard look at all of your transportation and related costs, we’d love to have a conversation with you.  After all, “helping you find the money you never knew was missing” is exactly what we do! We are happy to run a parcel audit or a freight invoice audit for you.