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FedEx Extends Peak Surcharges into 2021

As is so often true in times of crisis, the industries hardest hit by the COVID-19 pandemic are also the ones that people depend on daily: namely shipping providers like UPS, FedEx, and the United States Post Office.

Faced with extremely high demand for capacity and increased operating costs across its network, in August, FedEx followed the lead of UPS and the United States Postal Service by announcing new peak season surcharges, effective early November. Company officials said they did this not only to provide their customers with the best possible service during an understandably challenging time, but also to help mitigate risk from what was expected to be historic holiday shipping volumes.

These changes were expected to be in effect until January 17, 2021. However, with Christmas not yet here, the company has already announced they will be extending these surcharges long past their original date of expiration.

FedEx Surcharges and the 2020 Peak Season: What You Need to Know

When the surcharges were originally announced, FedEx indicated the changes would only apply to shipping customers reaching a certain package volume threshold. Specifically:

  • Customers had to ship more than 35,000 packages on average per week between October and November for surcharges to apply later in the year.
  • The amount of the surcharge would depend on how much more they were shipping during October and November than they were between February 3, 2020 and March 1, but residential shipments would see surcharges ranging between $1.00 and $5.00.
  • FedEx announced that even FedEx Smart Post (when FedEx hands packages to the USPS for crucial last-mile delivery) would see an additional increase of $1.00 per package for any items shipped between November 2 and November 29.
  • From November 30 to December 6, Smart Post surcharges would increase to $2.00 per package, after which the surcharge would go back to $1.00 until January 17, 2021.

Or at least, that’s how things were supposed to go.

As of December 22, 2020, FedEx is the first carrier to confirm they will not be ending their surcharges as originally planned – but few expect them to be the last. A large part of this has to do with ongoing market conditions that are making things challenging. Not only is FedEx dealing with limited carrier capacity, but they also have a significantly heightened residential delivery volume right now thanks to 2020 peak season demands. This, coupled with the fact that there are relatively few available carriers for parcel shipping, has created something of a perfect storm in the worst possible way.

According to FedEx’s own website, there are three surcharges that will officially begin on January 18, 2021, and that will continue “until further notice.” These are:

  • Peak – Oversize Charge Surcharge: This applies to U.S. Express Package Services, U.S. Ground Services, and International Ground Service, and comes in at $30.00 per package.
  • The Peak – Additional Handling Surcharge: This impacts all of the same parcel shipping services as outlined above and adds an additional $3.00 charge per package.
  • Peak Surcharge for FedEx Smart Post Package Services: This adds an additional $0.75 cents per package.

The announcement that FedEx Smart Post surcharges will continue is particularly bad news for smaller e-commerce shippers, as they’re the ones that tend to deal with higher volumes of lighter packages. Experts agree that businesses in the cosmetics and apparel industries are likely to feel the immediate impact of this announcement.

Some people speculate that FedEx surcharges are here because the company truly needs them. Others think this is a clear-cut case of “they’re doing it because they can get away with it.” Regardless, it’s safe to say that a multi-carrier shipping solution has never been more critical for reducing parcel transportation spend.  To learn more about multi-carrier shipping technology, watch the Logistyx webinar, Simplifying the Complexity of Multi-Carrier Parcel Management.