There are a lot of reasons to love September. But FedEx’s annual GRI announcement isn’t one of them.
Last week, the carrier shared plans to increase its Express and Ground prices by an average of 5.9% in 2022. In addition, FedEx will make an adjustment to its Fuel surcharge table trigger points that will result in a 1.75% Fuel surcharge increase for both its U.S. Express and Ground Services. FedEx also announced logic changes that will create a zonal structure for Additional Handling and Oversized packages, while adding a new surcharge for Ground Economy packages.
Here at AFS we’ve been anticipating this development for a while, which is why we’re already busy crunching the new numbers to see how they’ll affect our clients and their 2022 budgets. So, hang tight. We’ll have those numbers to you soon.
Meanwhile, we thought you’d find it helpful to have all the key takeaways from this and other recent FedEx pricing announcements in one handy place – and to answer several of the most pressing questions that you’re likely to have.
When will these newly announced changes go into effect?
It runs the gamut. Some, like the Fuel surcharge increase, will kick in as early as November 1, 2021. Others, like the new Additional Handling and Oversized surcharge calculations, won’t take effect until January 24, 2022.
What will happen to base rates for Domestic Express, U.S., Export and Import, Ground and Home Delivery?
These rates will increase by an average of 5.9%. Premium services will experience higher increases than Ground, especially in shorter zones.
- Priority and Standard Overnight shipments for zones 2-4 will increase by 7.1% or more.
- Express Saver rates for zones 2-4 will increase by as much as 9.8%.
- Ground service rates will increase by about 6.0% across all zones.
What about the Ground minimum?
That’s changing from $8.76 per package to $9.36 per package – an increase of 6.8%. It’s not unusual for the Ground minimum increase to be higher than the base rate increase, which is why AFS always advises clients to pursue discounts for the former as well as the latter.
How will the Residential surcharge be impacted?
More shippers will trigger the post-peak Residential surcharge. Plus, that surcharge will cost considerably more.
- Shippers will trigger the Residential surcharge sooner – when they hit 25,000 packages rather than last year’s threshold of 30,000 packages.
- The $0.60 per package Residential surcharge that will go into effect for high-volume weekly shippers on January 17 represents a 100% increase over last year’s $0.30 post peak Residential surcharge.
What’s happening with the Additional Handling and Oversize surcharges?
FedEx’s Additional Handling and Oversize surcharges are both changing from flat fees to zonal ones. And depending on how far packages ship, it could wind up costing companies up to 38% more than they’re currently paying.
- Only Zone 2 shipments will cost a bit less (just $0.25) for Additional Handling in 2022. For Zones 3+, all other Additional Handling charges will see prices ranging from:
- $17.50 to $21.50 for dimensional (up 9.3 – 34.3% from this year’s charge of $16.00)
- $27.50 to $31.50 for weight (up 7.8 – 23.5% from this year’s charge of $25.50)
- $16.00 to $18.00 for packaging (up 14.3 – 28.6% from this year’s charge of $14.00)
- Customers of U.S. Express and FedEx Ground will pay Oversize surcharges of anywhere from $110.00 to $145.00 per package (up 4.8 – 38.1% from this year’s charge of $105.00).
- FedEx Home Delivery customers will be charged anywhere from $135.00 to $170.00 per package (up 3.8 – 30.8% from this year’s charge of $130.00).
Are there any other new – or newly modified – surcharges?
Yes, FedEx has also added several new charges – or modified existing ones – to make the terms more favorable for its bottom line. For example:
- Ground Economy shippers will also be subject to a new $1.00 per package surcharge for any package that is classified as “delivered or returned.”
- The International Out-of-Pickup-Area and Out-of-Delivery-Area surcharge will be based on a tiered zip code list.
How will Peak Surcharges be impacted?
Peak season 2021 – which runs from October 6, 2021, to January 16, 2022 – will be about the same length as peak season 2020. However, it will cost shippers considerably more.
- The FedEx Ground Economy Peak surcharge of $1.50 to $3.00 will be 50% higher than the same charge for last year’s holiday season.
- The Oversize Peak surcharge of $62.50 will be $10.00 more (19.05% higher) than the same charge for last year’s holiday season.
- Additional Peak charges for Ground Economy will apply.
- All of these Peak surcharges will be in addition to – not instead of – the many surcharges that are currently in place as a result of COVID-19.
Where can I go to learn more?
We know that trying to understand and navigate carriers’ latest rates and surcharges can be confusing and time-consuming. And we’ve got a full complement of veteran parcel experts and analysts who are ready to optimize your shipping costs while maximizing your efficiency. If you would like a detailed analysis – or if you’d like some advice about how to mitigate the impact of the 2022 GRI on your business:
- Stay tuned for our webinar which will be available for download next week.
- Send an email to [email protected].