Dive Brief:
- FedEx announced a 3.9% average standard list rate increase for FedEx Express package and freight, and an average 4.9% standard rate increase for FedEx Ground, Home Delivery and certain Freight zones effective Jan. 2, 2017, according to the company website.
- In addition to the annual rate increase, the company also announced changes to 19 shipping fees and surcharges, the dimensional weight calculation, and FedEx Retail Rates and One Rate pricing.
- FedEx said it will increase spending to keep up with growth in e-commerce and upgrade its planes, which was shown in its June release to boost outlays for fiscal year by 6%, the Wall Street Journal reports.
Dive Insight:
FedEx's rate increase follows a very similar increase from UPS, which began to take effect this week. The two companies have raised rates by nearly identical margins for over a decade now, DC velocity reports, allowing them to increase investment while retaining market share.
As a result, the two companies' main differences lie in surcharge pricing.
In perhaps the most impactful shift, FedEx announced it would begin adjusting fuel surcharges on a weekly basis, as opposed to monthly, in order better tie the surcharges to the spot price for a gallon of kerosene-type jet fuel. Drastic fluctuations in fuel prices over the past year likely led to this policy change. However, the company followed UPS' example in raising the additional handling surcharge for next year.
