FedEx Adds Delivery Surcharges to Combat Coronavirus Surge

Less than two weeks after United Parcel Service (UPS) posted surcharges on all types of deliveries, FedEx Corp. has followed suit. In an announcement posted on its website last week, FedEx said it's imposing a temporary surcharge, effective today, June 8, on certain types of packages as shipping carriers struggle with the surge related to e-commerce orders due to the coronavirus pandemic. Like the UPS surcharge, the new fees will largely impact high-volume shippers as well as “oversize” packages. The three temporary peak surcharges include:

• FedEx SmartPost packages: $0.40 per package (FedEx SmartPost is a contract-only service)
• Peak, Oversize Charge: $30 per package for U.S. domestic FedEx Express and FedEx Ground packages (oversize is considered any package that exceeds 96 inches in length or 130 inches in length and girth).
• Peak, Residential Delivery Charge: $0.30 per package for U.S. domestic residential FedEx Express and FedEx Ground packages (applies to customers at the enterprise level whose volume exceeds 120 percent of their typical weekly volume).

Total Retail's Take: New surcharges from UPS and FedEx isn't welcome news for retailers, many of which are just trying to survive in these challenging times. The delivery companies said they needed to introduce the new surcharges to offset rising costs and manage a surge of packages flowing through their networks during the coronavirus pandemic. For both companies, the fees are designed to hit some of the largest shippers, whose volume has grown as consumers, following stay-at-home orders, have increased their online shopping. Analysts have praised the surcharges, saying that while the growth of e-commerce  is very positive for delivery companies' revenues, it has made profitability extremely challenging because of density challenges on the last mile. But for retailers, it's just one more piece of bad news in what's turned out to be a very challenging three months.