More FedEx Surcharges Take Effect Today

February 15, 2021


High demand spurred by the pandemic, according to FedEx, is leading to more surcharges effective today, February 15, impacting Ground and Express parcels.

Domestic

First up, a $0.30 per parcel will apply to Express and Ground domestic residential parcels for customers who shipped more than 30,000 weekly average parcels from January 4-January 31. The surcharge will exclude SmartPost and One Rate parcels. SmartPost parcels will be subject to the previously Peak Surcharge ($0.75 per parcel) effective January 18 until further notice.

More retail customers will likely be impacted by this surcharge due to January not only being the traditional month of holiday returns but also because many retailers extended returns policies through the end of January because of COVID-19 concerns.

According to FedEx, it has set return volume records for the past six straight months, a trend that the firm expects to continue in the next several months.

International

Since the beginning of the COVID-19 pandemic last March, air cargo capacity has been considerably constrained due to the reduction of passenger airplanes. Capacity has slowly returned to the global market since March, but it is still not at the level necessary to meet demand.

According to the latest Accenture-Seabury’s report, COVID-19: Impact on air cargo capacity, published February 4, for the two weeks of January 11-January 24, global air cargo capacity is down 17% compared to the same period in 2020 with North America to Europe down 30% and Europe to North America down 37%. Latin America to Europe air capacity is down 52% and Europe to Latin America capacity is down 49%.

To manage international demand, FedEx Express introduced additional peak surcharges last April. Since then, the surcharges have been increased several times.

Effective February 15, FedEx implemented the following Express surcharges:

  • $0.15 and $0.35 per pound for parcels and freight respectively between the US and the EU
  • $0.10 and $0.35 per pound for parcels and freight respectively between the US and the EU
  • $0.35 per pound for freight between LAC and the EU

“Our goal is to profitably take market share and keep it beyond the capacity shortage internationally. As such, we are prioritizing business from small and medium customers, and reprioritizing any volume from resellers, ensuring we protect the business that will stay with FedEx for the long term,” Brie Carere, Executive Vice President, Chief Marketing and Communications Officer for FedEx, said during the company’s earnings call on December 17.

The surcharge increases come at a time that trans-Atlantic ocean freight demand is showing signs of pre-pandemic demand, however, spot rates per FEU remained over $2,000 as of the last week in January according to air and ocean freight rate benchmarking and market intelligence platform, Xeneta.

 


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Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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More FedEx Surcharges Take Effect Today

February 15, 2021


High demand spurred by the pandemic, according to FedEx, is leading to more surcharges effective today, February 15, impacting Ground and Express parcels.

Domestic

First up, a $0.30 per parcel will apply to Express and Ground domestic residential parcels for customers who shipped more than 30,000 weekly average parcels from January 4-January 31. The surcharge will exclude SmartPost and One Rate parcels. SmartPost parcels will be subject to the previously Peak Surcharge ($0.75 per parcel) effective January 18 until further notice. More retail customers will likely be impacted by this surcharge due to January not only being the traditional month of holiday returns but also because many retailers extended returns policies through the end of January because of COVID-19 concerns. According to FedEx, it has set return volume records for the past six straight months, a trend that the firm expects to continue in the next several months.

International

Since the beginning of the COVID-19 pandemic last March, air cargo capacity has been considerably constrained due to the reduction of passenger airplanes. Capacity has slowly returned to the global market since March, but it is still not at the level necessary to meet demand. According to the latest Accenture-Seabury’s report, COVID-19: Impact on air cargo capacity, published February 4, for the two weeks of January 11-January 24, global air cargo capacity is down 17% compared to the same period in 2020 with North America to Europe down 30% and Europe to North America down 37%. Latin America to Europe air capacity is down 52% and Europe to Latin America capacity is down 49%. To manage international demand, FedEx Express introduced additional peak surcharges last April. Since then, the surcharges have been increased several times. Effective February 15, FedEx implemented the following Express surcharges:
  • $0.15 and $0.35 per pound for parcels and freight respectively between the US and the EU
  • $0.10 and $0.35 per pound for parcels and freight respectively between the US and the EU
  • $0.35 per pound for freight between LAC and the EU
“Our goal is to profitably take market share and keep it beyond the capacity shortage internationally. As such, we are prioritizing business from small and medium customers, and reprioritizing any volume from resellers, ensuring we protect the business that will stay with FedEx for the long term,” Brie Carere, Executive Vice President, Chief Marketing and Communications Officer for FedEx, said during the company’s earnings call on December 17. The surcharge increases come at a time that trans-Atlantic ocean freight demand is showing signs of pre-pandemic demand, however, spot rates per FEU remained over $2,000 as of the last week in January according to air and ocean freight rate benchmarking and market intelligence platform, Xeneta.  

ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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