FedEx
- FedEx hit big shippers with a new round of surcharges ahead of the busy holiday season.
- The surcharge cycle will start with hikes on the cost for special deliveries, but continue with sweeping charges that extend in 2022.
- The move comes days after USPS also rolled out holiday surcharges.
- See more stories on Insider's business page.
FedEx is gearing up for a busy holiday season after a year of labor shortages and increased demand, and to help deal with the rush, the shipping and logistics company has rolled out a new round of delivery surcharges.
The main surcharge season kicks in on Nov. 1 with a $1.50-per-piece price hike for FedEx's Ground Economy deliveries. This applies to outbound residential deliveries for small and medium-sized businesses and covers low-weight, low-value, non urgent deliveries – the majority of typical consumer packages.
This first surcharge expires on November 28, but will be upped to $3 per package the following day and will last until Dec. 12 to compensate for Black Friday and Cyber Monday purchases. The surcharge will then return to the original $1.50 from Dec. 13 to Jan. 16.
The company also announced a 60-cents-per-piece charge starting Jan. 17, 2022 for retailers whose shipment volumes qualified for holiday surcharges. So far, there is no expected date for the end of this cycle.
The move comes days after the United States Postal Service announced similar price hikes to cover "extra costs" that occur during the holidays. FedEx's private carrier competitor, United Parcel Service, has also rolled out new "peak" surcharges.
The new delivery surcharges could add extra pressures to merchants and retailers' operating costs because businesses must either absorb the increases or pass them on to their customers. A spike in transportation costs have pushed consumer prices higher at stores and restaurants as major companies struggle to maintain their margins.
Delivery giants like UPS, DHL, FedEx and USPS have been slammed by a litany of issues since the start of the coronavirus pandemic last year. With people on lockdown, ordering spiked. Meantime, as the US economy began to reopen this year, companies have dealt with labor shortages, including a critical shortage of truck drivers, as well as rising fuel and commodity costs.
FedEx has turned to offering pay raises and perks for its current logistics employees. Last year, FedEx was forced to place daily package limits on some businesses as its shipping network faces capacity issues around the holidays.
"If we assume that labor's going to stay tight for a prolonged period of time, it is absolutely going to be more expensive to ship," Ravi Shanker, a Morgan Stanley analyst, previously told Insider.
FedEx did not respond to a request for further comment about the surcharges.