FedEx 2021 Rate Increase – How much will it Impact Shippers

On September 14th, FedEx released their rate changes which will go into effect in early January, 2021.  Most increases are expected at this time of the year, but there are several which may catch some customers off-guard.  Below is a summary of what to expect.

  • FedEx will begin charging a 6% late fee to U.S. FedEx Express and FedEx Ground customers who don’t pay their invoices within their agreed upon payment terms. This will be effective January, 2021 and FedEx claims that this new policy aligns them with general business and industry standards.
  • Freight rates will increase for FedEx Express, FedEx Ground, FedEx Home Delivery®, FedEx SmartPost® and FedEx Freight on January, 4th, 2021.  FedEx confirmed in their September 15th earnings release that the increase in shipping rates will average 4.9%.  Accessorials will also see an increase with an average just over 6.4%.  Below is a per charge summary of the price and percentage increase from the current 2020 rates.

 

 

Minimums will also see an average increase of 4.7%, with the highest being Ground Commercial and Home delivery.

 

 

The increases to some of the most utilized freight services are easiest to see with the visuals below. For Ground shipments, those who ship packages up to 5lbs will see the highest percentage increase at over 6%.  This increase spans across all zones.

 

 

 

Regarding Standard Overnight, packages up to 20lbs going to Zones 7 and 8 will incur increases close to 7%, while the other weight ranges in those Zones will have an average increase of over 5%.

 

 

 

2nd Day shipments have a flat average across the board for Zones 2-4 and Zones 5-8. However, the average increase for Zones 5-8 will be close to 6%.

 

 

 

With Express Saver, similar to the Ground increase, lighter packages will have increases of over 5% across all Zones,  but, Zones 7 and 8 in particular will see increases of nearly 8% for many of the package being shipped into those areas.

 

 

 

  • There will be surcharge changes to FedEx Express, FedEx Ground and FedEx Freight, effective January 18, 2021. One notable change pertains to the threshold on Additional Handling. Carriers find it cumbersome to deal with large packages, so the added criteria applies when a package is greater than 105 inches in length and girth (the length and girth is length plus (two times the height) plus (two times the width)). In addition, the following will also go into effect:

 

Effective Jan. 18, 2021, there will be a FedEx Freight High
Cost Service Area SurchargeThe surcharge will apply to any shipment that is not rated on the below list of transportation rates, if the origin ZIP code
and/or the destination ZIP code of the shipment are on a
select list of U.S. ZIP codes.• Current FXF PZONE, FXF EZONE, FXF 1000, FXF 501 base rates in effect at the time of shipping.
Effective Jan. 18, 2021, certain international shipments
to/from the U.S. will be assessed an International Out-of-Delivery-Area Surcharge or an International Out-of-Pickup-Area
Surcharge for International Express Freight services based on ZIP code location of the pick-up or delivery.

 

  • Fuel surcharge for U.S. Domestic Express Freight services will now be a charge per pound assessed on the rated weight of the shipment. The charge per pound will be subject to weekly adjustment based on the weekly published U.S. Gulf Coast spot price. This change will be effective Feb. 1, 2021.

 

Every shipper will be impacted by the rate increase, while still adjusting to the additional fees that were introduced earlier this year as a result of COVID-19, not to mention the further additional upcoming Peak Surcharges Fees.

At LJM Group, we help clients understand the impact of these fees and the overall rate increase, and we effectively  mitigate some of the risks and projected expenses associated with them.