FedEx announced their 2020 rate increase on September 19th. These increases will go into effect on January 6th, with additional changes going into effect on January 20th. As previously noted of FedEx rate increases, the announced rate increase of 4.9% can mean different things to you as a shipper. For 2020, certain services and shipments to certain zones are increasing by as much as nearly 8% year over year. Additionally, surcharges and other aspects can increase at a much higher rate than the shipping rates themselves.
FedEx Ground has typically had a minimum billable weight of a zone 2, 1 lb. list rate charge. This minimum amount will now increase to $8.23. This is an approximate 5% YoY (year over year) increase.
The Express Saver (3 Day) service is seeing a greater increase than most other services, increasing on average by over 7% YoY.
Delivery Area Surcharge
Delivery Area Surcharge (DAS) and Extended Delivery Area Surcharge add additional costs to shipments delivered to postal codes that are outside of more immediate coverage areas. The zip codes themselves, however, are changing and the surcharges themselves are increasing substantially. For example, the Extended Commercial Delivery Area Surcharge is increasing from $2.85 to $3.60. This is an over 26% increase from last year. FedEx Ground Extended Commercial Delivery Area Surcharge is increasing by nearly 28%, from $2.70 to $3.45 per package.
Lastly, policies regarding additional handling and oversize packages will change in 2020 significantly. The Additional Handling (weight) surcharge will change its threshold from 70 lbs to 50 lbs. This affects Domestic Ground and Express shipments. The threshold for international Express and International Ground shipments will still be 70 lbs. This change will go into effect on January 20th.
The Additional Handling surcharge will increase from $20 to $24, a 20% increase, while the Additional Handling–Dimensions surcharge will increase from $13.50 to $15.00, an 11% increase year over year. Additional Handling for dimensions applies to any parcel whose longest side exceeds 48″ or whose second longest side exceeds 30″.
What Does This Mean For You As a Merchant?
As always, it is critically important to evaluate your own shipping habits to ensure that you are using the right services for you to reach your customers. An emphasis on the delivery objective itself and your buyer’s needs for shipment delivery and visibility will help to ensure you are using the right carrier services to satisfy the right needs. Accurately measuring your packages and reducing unnecessary space has become a critical factor in shipping cost management. Lastly, communication with your carrier is more important than ever to discuss your customer’s delivery needs and match them with the right carrier service offering.