FedEx rolls out 2020 COVID-driven peak charges

While endeavoring to enjoy some time off last week, in southern Maine (which was accomplished), Memphis-based transportation and logistics titan FedEx, not surprisingly, issued its “2020 Seasonal Peak Surcharges and Fees.”

To be sure, this was expected and did not catch anyone off guard, by any stretch, especially after its main rival—and the other half of the parcel duopoly—UPS announced its own peak surcharges just a few weeks back.

While I would have liked to written this information up in a more timely manner, vacation called. Given the, um, unusual nature of 2020, it is safe to say that time off took priority in this case.

In offering up the drivers for the rate increases, FedEx explained that it continues to keep commerce moving and delivering critical shipments to homes during the COVID-19 pandemic, as well as continue providing its customers with the best possible service during this challenging time.

“As the impact of the virus continues to generate a surge in residential deliveries, we are entering this holiday peak season with extremely high demand for capacity and are experiencing increased operating costs across our network,” it said. “We anticipate residential volume to continue to surge into the new year.

Perhaps one of the biggest takeaways of this recent announcement comes in the form of a Peak Residential Delivery Charge.

FedEx described that charge as follows (more information is available here:

• Customers at the enterprise level who meet a certain volume threshold (as indicated below) will be charged a Peak — Residential Delivery Charge for shipments/packages shipped during Nov. 2, 2020–Jan.17, 2021. The scope of a customer's volume shall be determined by FedEx in its sole discretion. The Peak — Residential Delivery Charge will be assessed in addition to the customer’s Residential Delivery Charge. Any contracted discount the customer may have on the Residential Delivery Charge will not apply to the Peak — Residential Delivery Charge. For invoicing purposes, this charge will be combined with the customer’s Residential Delivery Charge.
• For customers who ship more than 7,000 weekly average packages (total for FedEx Express and FedEx Ground Canada domestic residential and commercial combined) from Oct. 5, 2020–Oct. 18, 2020*, the Peak — Residential Delivery Charge reflected in the chart below will apply Nov. 2, 2020–Dec. 13, 2020. The amount charged will be based on a Peaking Factor, calculated as weekly average packages shipped Oct. 5, 2020–Oct. 18, 2020, divided by weekly average packages shipped Feb. 3, 2020–March 1, 2020, multiplied by 100. Peaking Factor and amount charged are determined separately for FedEx Express and FedEx Ground;
• For weeks with holidays, weekly average value will be prorated based on the FedEx normal operating days during non-holiday weeks;
• For customers who ship more than  7,000 weekly average packages (total for FedEx Express and FedEx Ground Canada domestic residential and commercial combined) from Nov. 16, 2020–Nov. 29, 2020*, the Peak — Residential Delivery Charge reflected in the chart below will apply Dec. 14, 2020–Jan. 17, 2021. The amount charged per package will be based on a Peaking Factor, calculated as weekly average packages shipped Nov. 16, 2020–Nov. 29, 2020,* divided by weekly average packages shipped Feb. 3, 2020–March 1, 2020, multiplied by 100. Peaking Factor and amount charged are determined separately for FedEx Express and FedEx Ground;
• For weeks with holidays, weekly average value will be prorated based on the FedEx normal operating days during non-holiday weeks; and
• Customers who qualify for the Peak — Residential Delivery Charge will be notified of their Peaking Factor prior to the effective date. For customers whose peak volume exceeds 7,000 and who have a Peaking Factor greater than 200%, a peak volume schedule must be discussed and approved by FedEx
• There is a lot to chew through there, to be sure.

An industry observed recently told LM that that these peak surcharges, from both UPS and FedEx, point to how, unfortunately, there is no relief for shippers and the Covid-related surcharges will continue until Peak Season surcharges kick in.

And John Haber, Founder and CEO,  of Atlanta-based Spend Management Experts, observed that the FedEx Peak Season Surcharges are mostly as expected and in-line with the UPS announced increases with one major exception. 

“The UPS SurePost surcharge only applies to customers that ship 25,000 packages a week combined between UPS Air Residential, UPS Ground Residential and UPS SurePost.  However the FedEx SmartPost surcharge applies to all customers that use SmartPost during the specified time period,” he said. “With the recent Peak Season surcharges announced by the USPS, we believe that UPS will likely adjust their criteria for applying fees to SurePost.”

We are clearly in different times, and the influx of Covid-driven online ordering is definitely part of that. That is something that does not appear to be changing anytime soon, whether we take vacation or not.