- FedEx will implement a new peak surcharge on Express and domestic residential Ground shipments, as it deals with "elevated volume" due to the pandemic, the logistics provider announced Friday.
- The surcharge will impact shippers that had a weekly average volume of more than 30,000 packages between Jan. 3 and Jan. 31. The fee will take effect Feb. 15 and apply until further notice, the carrier said.
- Shippers who fall into this category will be charged 30 cents per Express and Ground residential package. SmartPost and One Rate packages in the Ground network are excluded from the new fee, according to a rate update. FedEx announced indefinite SmartPost peak surcharges of 75 cents per package beginning Jan. 18 in December.
U.S. consumers have increasingly turned to e-commerce throughout the course of the coronavirus pandemic, which has resulted in surging package volume and strained FedEx, UPS and other logistics companies. The carriers have utilized surcharges in an attempt to help manage capacity.
At the end of June, FedEx warned that peak surcharges would be "the new normal," as it didn't expect e-commerce volume to slow any time soon. And FedEx has lived up to this suggestion, increasing peak surcharges multiple times in the months since that earnings call.
In August, FedEx announced surcharges covering holiday volume scheduled to stay in place between Nov. 2 to Jan. 17. In September, it announced three surcharges on large-from packages and high-cost delivery zones that are scheduled to take effect Monday. And in December, the logistics company announced a new fee covering SmartPost shipments, set to take effect next week.
UPS also announced new surcharges at multiple points throughout 2020, as its network capacity was squeezed by elevated volume.
With peak season now in the rearview mirror, the announcement of the new surcharges highlights just how much FedEx plans to rely on these fees to manage its network moving forward.
FedEx Chief Marketing and Communications Officer Brie Carere noted in an earnings call last month that the surcharges have helped it to offset other costs associated with high volume and the pandemic, and have "played a critical role in our revenue quality strategy this peak."
"We believe surcharges will be a part of our pricing strategy moving forward for e-commerce," Carere said. "They are a necessary part."
Dean Maciuba, a managing partner at Last Mile Experts, said in a LinkedIn post on Friday that it makes sense from FedEx's perspective that the new fees target larger customers.
"FedEx assumes that these large customers will accept the price increases and just pass on the added cost to their customers," Maciuba wrote. "However, it is difficult for large e-commerce merchants to pass on the rate increase to the consumer, without compromising the free shipping component of the e-commerce value proposition."