FedEx SmartPost to Raise Rates Again?
However, since the negotiated services agreement (NSA) between the USPS and FedEx SmartPost isn't public, none of us have visibility to FedEx SmartPost's actual pending increase. My strong suspicion is that the contract includes preferential terms, and that FedEx SmartPost receives a lesser rate increase than those shown above in chart two. The other possibility is a potentially delayed implementation of the rate increases.
So, is another FedEx rate increase of 8.3 percent in April — on the heels of a 6.2 percent increase in January for SmartPost packages up to 10 pounds — justified?
Well, let's add the Postal Service's actual dollar increases pending to current SmartPost pricing (Chart 3 below).
An 8.3 percent increase is NOT justified, not by a longshot because the base rates for SmartPost are so much higher than the baseline rates for Parcel Select services for destination delivery unit (DDU) entry. Obviously, applying the same percentage increase to a much higher number (FedEx SmartPost) results in a significantly higher rate increase for shippers than the actual increases incurred by FedEx. Shippers are wise to keep this in mind when negotiating SmartPost increases.
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.