Shipping Rates to Increase for FedEx Express, FedEx Ground and FedEx Freight Services

FedEx Increasing Shipping Rates

FedEx Express, FedEx Ground and FedEx Freight, subsidiaries of FedEx Corp., will increase shipping rates effective January 7, 2019.

FedEx Express shipping rates will increase by an average of 4.9% for U.S. domestic, U.S. export and U.S. import services.

FedEx Ground and FedEx Home Delivery shipping rates will increase by an average of 4.9%. FedEx SmartPost shipping rates will also increase.

FedEx Freight shipping rates will increase by an average of 5.9%.

This rate change applies to eligible FedEx Freight shipments within the U.S. (including Alaska, Hawaii, Puerto Rico, and the U.S. Virgin Islands), between the contiguous U.S. and Canada, within Canada, between the contiguous U.S. and Mexico, and within Mexico.

CNN Business reports that FedEx rival United Parcel Service (UPS) has yet to announce its rate increase for 2019.

But the US Postal Service has proposed increasing its rates for Priority Mail boxes by an average of 5.9%.

The Postal Service wants the rate hikes to take effect in January, but the government hasn't yet ruled on the proposal.

Higher Fuel Prices Causing Higher Costs

FedEx reported that in the quarter ending in August, its fuel costs were 40% higher than a year earlier, and labor costs were up 11%.

The increased price of jet fuel alone increased its costs by more than $200 million in the quarter.

But FedEx has been able to capture some of those increased fuel costs through a separate fuel surcharge it has in place for some shippers.

A shortage of truck drivers has driven up labor costs as well. FedEx and its competitors are struggling to keep up with increased demand for their services.

Growth of Ecommerce

The growth in online shopping and ecommerce has hiked shipping volumes for FedEx, UPS and the Postal Service.

FedEx has said it expects the four Mondays during the upcoming holiday shopping season will be the four busiest days in the company's history.

Read: Holiday Season Battles Heat-Up with Amazon Offering Free Shipping to Everyone

At the same time, companies such as FedEx and UPS are facing increased competition from Amazon (AMZN) itself, which is starting its own delivery service using contract workers to handle package deliveries.

Shares of FedEx (FDX) which are down about 10% for the year, were higher Monday morning following the rate announcement. UPS (UPS) shares, which have also been lower this year, rose on the news.

Details of all changes to rates and surcharges are available at FedEx Shipping Rates.

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