Fueled by a spike in costs as a result of increased demand during the coronavirus pandemic, FedEx announced rate surcharges on January 15th in addition to a previously announced rate increase of 4.9 percent for domestic services implemented on January 18th.
While the additional $0.30 charge for each residential package will only affect high volume customers who ship in excess of 30,000 packages a week, the increase will likely come as no surprise to many eCommerce sellers who already struggled with 2020’s peak season shipping limitations. But as FedEx continues to battle with its chief rival UPS for the shipping delivery market share, many sellers are left wondering just how significant an impact the new rates will have on their business.
New FedEx Shipping Increases in 2021
Effective January 18th, FedEx will be applying an additional handling surcharge of $3.00 for packages exceeding the dimension of 48 x 30 inches or weighing more than 50 pounds for all domestic packages sent during peak season between June 8th and November 1st 2020, in addition to an oversize charge of $30.00 per package.
Packages sent via FedEx SmartPost® during peak season will be subject to an additional surcharge of $0.75 starting January 18th.
Any incomplete or incorrect addresses will see an address correction fee of $18 per correction for packages sent via US Express or Ground as well as International Express, Ground, Priority and Economy Freight services. Address corrections for US Express Freight Services will now be charged a $93 fee per correction.
Starting on January 18th, a multi tiered FedEx Freight High Cost Service Area Surcharge will be added for shipments delivered to select US zip codes. Applicable charges include a $25 flat rate for Tier 1 packages, a $50 flat rate for Tier 2 packages, an $80 flat rate for Tier 3 packages and a $250 flat rate for Tier 4 packages.
An additional fuel surcharge delivery fee will now be assessed per pound on the rated weight of each shipment sent by US Domestic Express Freight services as of February 1st. Please see the following table for effective fees.
Effective February 15th, an additional residential surcharge of $0.30 will be added for each package sent by customers exceeding an average of 30,000 shipments per week in addition to existing fees.
For other changes to both domestic and international FedEx Express, Ground and Freight services, please see the Official Guide to 2021 Changes as well as other transportation-related fees and shipping information.
How Your Business Can Adjust To Rate Surcharges
1. Evaluate Your Delivery Volume and Methods
Calculating your delivery average used to be fairly simple. But as any merchant can tell you, 2020 effectively tossed a monkey wrench into any transportation and fulfillment processes. You may not necessarily be able to predict your volume in 2021, but you can easily calculate your transportation and delivery budget based on monthly shipping costs, carrier service ranges, base rate and additional fees. While your budget may need to be adjusted based on seasonal increases as well as the growth of your business, understanding your delivery methods and volume is fundamental to understanding your monthly operational costs.
2. Diversify Your Shipping Options
During peak season, many vendors are making the decision to choose from multiple delivery providers based strictly on pricing. But cost alone shouldn’t be the sole factor in choosing a transportation service. While FedEx may be a consistently reliable service, cost efficacy is based on both your budget, volume as well as the breadth of service—and not just during peak season.
Third party logistic providers (3PLs) can allow you greater control and flexibility during seasonal volume increases; but they’re not without certain drawbacks. While the costs can be variable and generally more straightforward, the scope of services from a 3PL may not necessarily be as broad as a major transportation provider. Your decision should ultimately be based on volume, fulfillment rates and accessibility. Being tied into one provider means weighing your cost against their historical performance; but being tied into multiple providers can sometimes mean uneven service.
3. Audit and Automate Your Accounts
Manually inputting your accounts payable into a spreadsheet can frequently mean inaccuracy in estimating and planning your monthly budget. And the results aren’t just disastrous on your operating costs. It can affect your overall customer service.
Realistic forecasting depends on realistic planning. And realistic planning means realistic solutions. There’s a number of automated software and cloud-based SaaS solutions currently available which don’t just automate your transportation accounts; they can give you direct insight into the impact they have on the overall value of your business. And the value of your business affects both your operations as well as the overall customer experience after delivery.
Color More Lines provides white glove, global account management of your eCommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.