2018 FedEx & UPS Peak Season Surcharges

The FedEx/UPS near-duopoly has allowed the two large carriers to control marketplace pricing for years, echoing each other’s rate hikes to the detriment of parcel shippers, small and large. It’s no surprise then, on the heels of UPS’ latest intra-year pricing changes, that FedEx has recently announced its own set of rate increases, effective September 3^rd.

The Additional Handling surcharge, for packages weighing greater than 70lbs, will increase from $12 to $20 for domestic express, international express, and domestic and international ground. Similarly, July 8^thsaw UPS raise its Additional Handling surcharge on packages weighing more than 70lbs from $12 to $19 and increased its Large Package Surcharge from $80 to $90.

FedEx’s Unauthorized Package Charge will increase 125%, from $300 to $675, keeping them in line with UPS’ increased Over Maximum Limits charge which jumped from $500 to $650 on June 4^th.

In addition, shippers will also see incremental, “peak” seasonal increases by FedEx to some of these surcharges to domestic express and domestic and international ground shipments between November 19^thand December 24^th. Compare these to the peak increases that UPS will institute between November 18^thand December 22^ndto all service levels and all domestic destinations.

• FedEx Additional Handling:  $3.20 / UPS Additional Handling: $3.15
• FedEx Ground Unauthorized Package Surcharge:  $150 per package / UPS Over Maximum Limits: $165 per package
• FedEx Oversize Charge:  $27.50 / UPS Large Package: $26.20

Shippers saw changes to these same charges earlier this year, in terms of the surcharge amount as well as to how they’re calculated.

These rate increase announcements signal the continuation of a trend that began last year. The carriers don’t want these packages in their parcel network, but in their freight/LTL network. If shippers don’t adjust accordingly, they will find themselves paying a premium.  Expect this trend to continue.

The one area FedEx and UPS differ, in terms of these latest rate increases, is the Peak Residential Surcharge. Surprising many, FedEx will not implement this surcharge for the second straight year, while UPS will not only apply the Peak Residential Surcharge once again, but will raise the rates established last year.

This could give FedEx a competitive advantage with shippers looking to shift some volume prior to peak.