FedEx rolls out COVID-19-based temporary peak surcharges

Coming on the heels of its biggest competitor, Atlanta-based UPS recently announcing plans to implement COVID-19-related Peak Surcharges, effective May 31, FedEx, in no small surprise, responded in kind yesterday, rolling out their own temporary COVID-19-related peak surcharges, which went into effect on Wednesday, June 8.  

“FedEx is an essential business keeping commerce moving and delivering critical shipments to homes during the COVID-19 crisis,” FedEx said in a customer update. “As the impact of the virus continues to generate a surge in residential deliveries and has also generated a surge in oversize hard-to-handle packages, we have experienced increased operating costs across our network.”

FedEx’s COVID-19 temporary peak surcharges include:

• a $0.40 per package surcharge for FedEx SmartPost packages until further notice;
• a $30 per package surcharge peak oversize charge for U.S. domestic FedEx Express and FedEx Ground packages until further notice [FedEx defines oversize as any package that exceeds 96 inches in length or 130 inches in length and girth];
• a $0.30 per package peak residential delivery surcharge for U.S. domestic residential FedEx Express and FedEx Ground packages until further notice [this applies to enterprise level customers who within a given week ship 40,000 FedEx Express residential and FedEx Ground residential packages combined, excluding FedEx Smart Post and FedEx OneRate, and whose volume in that same week exceeds 120% of their average weekly volume in February 2020]

A FedEx spokesman told LM that the company routinely reviews its pricing against current market conditions, while also being mindful of how it can continue to encourage growth for its customers—particularly the small businesses who depend on FedEx and are the backbone of the economy.

“As the impact of COVID-19 continues to generate a surge in residential deliveries and oversized items, the peak surcharges will help us manage the demand while maintaining strong levels of service for our customers,” the spokesman said.

Chase Flashman, co-Founder and CEO of Indianapolis-based ShipSights said in a LinkedIn post that this move by FedEx was not surprising.

“As expected, FedEx has followed UPS in announcing surcharges on Residential, SmartPost, and Oversize packages for larger shippers,” Flashman wrote. “Volumes have been extraordinarily high for both FedEx and UPS and the surcharges will probably help offset some of the small parcel providers' costs by placing some of the burden on retailers. However, the retailer, in turn, may then need to pass the costs to the customer who could, as a result, balk and walk. A sticky situation all around.”

That sentiment was echoed by Jerry Hempstead, president of Hempstead Consulting.

“It was very much expected,” he said. “Once UPS said they were going to do it, there is no reason for FedEx not to follow suit. Nobody is going to quit FedEx now because they have it, where they going to go for service? UPS? Well they announced it first. It’s really aimed at the really large shippers like UPS did. The ones overwhelming the networks right now.”