FedEx Announces 2014 Rate Increases for Express Products
This week FedEx announced average rate increases of 3.9 percent for express and international services, effective January 6, 2014. Unlike previous rates increases, FedEx will not offset rate increases by modifying fuel surcharge indexes. However, for many shippers the impact will be greater than the "average" increases announced, especially for deferred express products.
Many accessorial fees and surcharges — e.g., delivery area surcharges, residential surcharges, declared value and others — will also see an increase in 2014. In fact, all surcharge increases announced exceed the 3.9 percent average as reported by FedEx. Refer to the chart below for a partial list of the accessorial fees and surcharges that will be increasing in 2014.
FedEx ground and FedEx home delivery rates will be announced later this year. Historically, FedEx matches the ground increases set by rival United Parcel Service.
The general rate increase (GRI) has played a significant role in FedEx's revenue management strategy.
Mike Glenn, FedEx's executive vice president, market development and corporate communications, reported that well over half of all FedEx parcel traffic receives the full GRI.
Glenn recently said, "That's been one of our key strategies, to substantially increase the amount of parcel traffic that's covered by the GRI. We've done a terrific job [at that] over the last three [years] to four years. We certainly have contracts that still are in place today that are locked into a GRI, and it's based upon the contract term and not the annual GRI. But our sales team and our pricing science team have done a phenomenal job of working with customers to get them on an annual rate increase. So we're very pleased with that."
Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Rob has helped some of the world’s most recognizable brands reduce parcel shipping costs an average of 25 percent through contract negotiations, rate benchmarking, modal optimization, invoice audit and other savings vehicles. A cum laude graduate of UCLA, Rob has 20 years of transportation industry experience, including executive positions at DHL and Stamps.com, in addition to his work as an outside consultant since 2001.