Learn more about FedEx’s peak season parcel shipping surcharges
Inflation keeps rising (the fastest inflation in more than 40 years!) and so do shipping charges. FedEx is just the first to release their annual peak surcharges and fees announcement. Citing the surcharges in anticipation of “the surge in residential volume to carry over into the new year”¸ some of the early surcharges start already next month – September 5th – an earlier kickoff than last year’s October start date.
The 2022 FedEx Peak Shipping Surcharge Highlights
The Additional Handling surcharge (AHS) will almost double from $3.45 (Sept. 5 – Oct. 2) to $6.55 per package starting on October 3 and running through January 15, 2023. This surcharge applies to U.S. Express Package Services, U.S. Ground Services, and International Ground Service.
The Oversize surcharge is jumping from $30.00 in 2021 to $39.50 per package (Sept. 5 – Oct. 2, 2022) and $68.75 per package (Oct. 3 – Jan. 15, 2023) affecting U.S. Express Package Services, U.S. Ground Services, and International Ground Service.
The surcharge on FedEx Ground Economy will increase into 2023 from $1.00 to $1.50 per package (Oct. 31 – Nov. 27 and Dec. 12 – Jan. 15, 2023). This surcharge will climb even higher during the pre-Christmas rush to $2.50 per package from November 28 to December 11.
FedEx’s Dynamic Residential Delivery Charge
New this year is a change to the format for the weekly adjustment to residential delivery charges. In 2021, it was based on February 2020 and not centered around most of June up to the 4th of July, like it is this year. These changes will hit the piggy banks of enterprise level shippers (more than 20,000 packages during a calculation week) hard and could prove to be a strain on already stressed budgets.
Before going through what the surcharge amounts will be, let’s breakdown how it is calculated. For those unfamiliar, here are some terms to define:
- Calculation Week: The week during which the shipping volume is calculated.
- Application Week: The week during which the surcharge is applied based on the corresponding Calculation Week.
- Peaking Factor: This is a percentage, which is calculated by dividing the residential and FedEx Ground packages shipped during the corresponding Calculation Week by the weekly average residential and FedEx Ground packages shipped during June 6 and July 3, 2022, and then multiplying by 100. This is calculated using the same formula but determined separately for FedEx Express.
The surcharges for peak residential deliveries will adjust dynamically each week starting October 10, however, they are only applicable from October 31 – January 15. FedEx noted that there will be a 2-week lag between the week that shipping activity is calculated and the dates that the charges are applied. During this time period, FedEx Ground shipments can range anywhere from $1.25 to $6.00 per package depending on the corresponding Calculation Week and shipping volume. And for FedEx Express, they bump up to $2.25 to $7.00 per package. [See the charts]
How Shippers Can Manage Mounting Surcharges
FedEx Chief Communications Officer, Brie Carere, shares in the Q4 2021 earning call, “As we look at ’22 and ’23, we absolutely think that you’re going to see a greater than our historical average from a year-over-year price increase.” With FedEx focused on their profit margin and delivering only the types of shipments they want (and dinging you with surcharges for the rest), it is essential to find capacity elsewhere.
And though surcharges may be inevitable for FedEx shippers, that doesn’t mean that your brand should only be shipping with FedEx. A diverse and flexible carrier strategy can provide capacity throughout your shipping network. A balance of carriers that cater to the specific needs of your customers (service, region, etc.) will not only cultivate positive customer experiences but reduce shipping costs. Shippers can meet the minimum contractual spend amount and stay below the volume thresholds that carriers can (and will!) impose. This strategy of Carrier Volume Balancing is one that successful parcel shippers share as an essential play in their playbook for peak season.
Want to learn more? Check out the ProShip Parcel Playbook
Trust the Team that Wins with FedEx – 9 years running
The balancing act of divvying up your capacity doesn’t need to be stressful – your Multi-Carrier Shipping Software (MCSS) partner can leverage your data and an integrated Enterprise Software Stack (ESS), powered by an elite MCSS, can automate shipment processing, for operations like inventory sourcing and service and carrier selection.
With 9 years of FedEx Compatible Diamond Solution status (every year since the program began), ProShip is an expert on shipping with FedEx, boasting a team who has the experience and expertise to deliver positive results to our customers. With a vast carrier library and a simple onboarding process, ProShip can help support your journey to a diversified carrier strategy for customer delivery expectations now and however they may evolve in the future.
Navigate peak season and beyond with ProShip
From rate shopping to carrier compliance and shipping dock to door step, ProShip simplifies parcel shipping for the world’s top retailers, 3pls and manufacturers. Schedule a Discovery Call with one of our Shipping Experts to see how ProShip can help your business improve parcel logistics.