More Parcel Surcharges in 2021, Is This the ‘New Normal’?
One thing that’s come out of a rough 2020 for the shipping industry is that companies have become far too used to fees and surcharge announcements from the carriers.
Extra fees like accessorials and general rate increases (GRI) have always been part of shipping parcels, but the past ten months were unprecedented in the high number of new fees and surcharges implemented (and usually extended) by UPS and FedEx.
Understandably it’s been a tough year for the carriers. As we noted in our GRI Comparison Analysis, there’s been sharp short-term growth in ecommerce thanks to the pandemic. It’s not only market demand that’s changed so much; the carriers’ operations have been impacted, too. The result is that FedEx and UPS have become even more similar in their published pricing in 2021 in terms of rates, services, and accessorial charges.
Given all that, FedEx recently announcing a $.30 per package Residential Surcharge is anything but a surprise. From the carrier’s website:
… FedEx continues to keep commerce moving and delivering critical shipments during the COVID-19 pandemic. The impact of the virus continues to generate elevated volumes, and we continue to experience high demand for capacity and increased operating costs across our network. To continue providing our customers with the best possible service during this challenging time, the below charge will be effective Feb. 15, 2021 until further notice:
Customers at the enterprise level who meet a certain volume threshold (as indicated below) will be charged a Peak — Residential Delivery Charge for packages shipped from Feb. 15, 2021 until further notice. The scope of a customer’s volume shall be determined by FedEx in its sole discretion. The Peak — Residential Delivery Charge will be assessed in addition to the customer’s Residential Delivery Charge. Any contracted discount or cap the customer may have on the Residential Delivery Charge will not apply to the Peak — Residential Delivery Charge. For invoicing purposes, this charge will be combined with the customer’s current Residential Delivery Charge. Your FedEx sales representative will reach out to you regarding how it may impact you.
- For customers who ship more than 30,000 weekly average packages (total for FedEx Express* and FedEx Ground U.S. domestic residential packages and FedEx SmartPost® packages) from Jan. 4, 2021–Jan. 31, 2021 (the “Shipping History Period”), the Peak — Residential Delivery Charge will apply effective Feb. 15, 2021 until further notice. The charge amount of $0.30 per package will apply to FedEx Express and FedEx Ground U.S. domestic residential packages (excluding FedEx SmartPost® and FedEx One Rate® packages). FedEx SmartPost packages will be subject to the previously announced Peak Surcharge effective Jan. 18, 2021 until further notice.
For the full announcement, follow this link: https://www.fedex.com/en-us/shipping/current-rates/surcharges-and-fees.html#peak-surcharge.
This announcement comes a few short weeks after the FedEx and UPS GRIs went into effect, and following several year-end rate change announcements. The articles we’ve written on the TI blog over the past three months illustrate the timeline of updates very well, even when excluding the multiple GRI articles:
Even with this new announcement, and all the past ones mentioned here, shippers should expect both carriers to make additional adjustments to their services and pricing as 2021 continues. The impact of the pandemic and growth in ecommerce are still being understood and adapted to by the carriers.
As we have highlighted many times on our blog, this is not a time for shippers to be complacent and not pay attention to the increases. All shippers need to continue watching for service and rate adjustments from the carriers with more diligence than ever before. As we learned from 2020, UPS and FedEx are willing to make impactful rate and service announcements at any time and with no warning. If you are interested in understanding the cost impact to you from this recent announcement, the GRIs, or any of the new fees and surcharges still in effect from last year, email email@example.com for a no-obligation analysis based on your rate agreements.