FedEx Announces 2017 General Rate Increase
In a somewhat surprising move to industry analysts, FedEx has announced shipping rate and surcharge changes for 2017 that do not match those announced September 1 by rival UPS. FedEx Express, FedEx Ground, and FedEx Freight, subsidiaries of FedEx Corp. (NYSE: FDX), will increase shipping rates effective January 2, 2017 as follows:
- FedEx Express will increase shipping rates by an average of 3.9% for US domestic, US export, and US import services. Rates for UPS services will increase 4.9% for similar service categories.
- FedEx Ground and FedEx Home Delivery will increase shipping rates by an average of 4.9%. FedEx SmartPost rates will also change. While UPS also announced a 4.9% average increase, the UPS and FedEx published rates will not match in 2017. As an example, the Ground minimum charge for FedEx will be $7.25 compared to $7.32 for UPS.
- The dimensional weight calculation for FedEx Express and FedEx Ground packages will change from 166 to 139. On the other hand, UPS did not change the dimensional divisor for US domestic services.
- FedEx Freight Extreme Length surcharge will change from $85 to $150 and will be applied to shipments with dimensions of 12 feet or greater versus 15 feet.
- Other FedEx surcharges and fees will increase in 2017. Delivery Area Surcharges (DAS) will no longer match between FedEx and UPS.
- FedEx Freight will increase shipping rates by an average of 4.9%. This rate change applies to eligible FedEx Freight shipments within the U.S. (including Alaska, Hawaii, Puerto Rico, and the US Virgin Islands), between the contiguous US and Canada, within Canada, between the contiguous US and Mexico, and within Mexico.
Effective February 6, 2017, the fuel surcharge percentage for FedEx Express and FedEx Ground shipment will be subject to weekly adjustment. Previously, the surcharge was based on a monthly average.
The most striking change announced is the adjustment in dimensional weight calculation which has been in place since 2011. Prior to 2011, the dimensional divisor was 194. Today, it is 166, and effective January 2, 2017, it will be reduced to 139, which is the current divisor for International Export and Import shipments. The shift for many shippers is a surprise. As of this writing, UPS has not announced any intention of following the lead of its rival, FedEx. If you are interested in how the shift can significantly affect you, contact us for a free shipping assessment of your business’ transportation costs.