FedEx 2021 Rate Increase

As this crazy year comes to a close, one thing is for sure and that is that FedEx will be implementing their annual general rate increase (GRI) come January 2021.

Peak season surcharges used to be just during the holidays; however, during this pandemic, both FedEx and UPS have made some changes that many may not be aware of. Both have cancelled their guaranteed service refund, tacked on additional fees on International and Domestic packages and added new fees for customers that ship 35,000 packages per more weekly by air or ground for residential and commercial deliveries.

Both carriers are over capacity and they have the upper hand when it comes time to increasing rates and adding peak season surcharges.

Below I have illustrated some key points regarding the general rate increase that FedEx announced a few weeks ago.

*For the first time ever, FedEx will be adding a 6% late fee if a company does not pay their invoices by the due date on their weekly invoice. UPS has been doing this for a long time and FedEx has now followed suit.

*As you can see on the ground chart below, the 1-5-pound packages are taking on the heavier rate increase. On the FedEx website, it states the GRI average is 4.9%. Depending on your shipping characteristics that could be lower or higher than the 4.9% average.

*If you are using domestic express services, your price increase could increase quite significantly higher than the 4.9% average; especially if you ship to longer zones.

*International Export packages are taking on a larger increase than Import packages for this coming year. We will have to wait to see if FedEx reduces its peak season surcharge for 2021 that began on April 6th, 2020. Currently, FedEx is adding an additional charge per pound for International packages. Depending on the country of origin and the destination country, that is anywhere between a $.10 to $.90 per pound additional charge on your packages. Additionally, if you are importing and exporting you will have noticed the Peak Season Additional Surcharge.

*One of the biggest accessorial changes FedEx made is the third-party billing surcharge; it will increase from 2.5% of the net charge to 4.5% in 2021.

*Some of the main accessorial areas include residential surcharge, additional handling, large package, delivery area surcharge, address correction and more; these will see between a 3.2% and 9.2% increase starting in January.

Do you know how this General Rate Increase (GRI) will impact your business? Will a 5% or more price increase on your small parcel transportation hurt your bottom line? Will it force you to evaluate how you charge your customers? Will you need to factor shipping costs into your product cost? For a free detailed analysis, Mindful Logistics can help you navigate these changes.

E-mail Michaelmays@mindfullogistics.com to mitigate the negative impact that these changes can have on your bottom line for 2021.