FedEx Express U.S. package services and FedEx Ground services, the surcharge for residential shipments is $3.50 per package. However, if you opt for the FedEx Home Delivery service, the surcharge is $3.00 per package. Hence, the company is planning to slap a new surcharge on its largest customers considering higher pandemic-related costs and indicating that robust demand continues to give couriers considerable power to dictate prices.
A residential delivery charge applies to shipments addressed to a home or private residence. An extra fee of 3 cents per residential package is to be charged from February 15, for customers who have a weekly average volume of more than 30,000 packages in the month of January. The levy comes about a month after FedEx announced other surcharges that take effect Monday.
“The impact of the virus continues to generate elevated volumes, and we continue to experience high demand for capacity,” the Memphis, Tennessee-based courier said Friday on its website. The charge will allow FedEx “to continue providing our customers with the best possible service.”
Both FedEx, as well as chief rival United Parcel Service Inc., have raised prices aggressively post-pandemic because of the reason that the pandemic caused consumers to order more goods online rather than shopping in stores. Hence, taking advantage of this opportunity the prices were raised. Profits sore at both courier companies even as they grappled with new expenses to keep workers safe and to handle an influx of residential deliveries, which are more costly than multipackage business shipments.
The surcharge is “positive for both” FedEx and UPS, Allison Landry, an analyst at Credit Suisse Group AG, wrote in a note to clients Friday. FedEx surged 58% in the 12 months through Thursday and UPS jumped 39% while the S&P 500 advanced 16%. FedEx fell 1.2% to $253.28 at 1:03 p.m. Friday in New York.
Any shipping charges or fees applied to packages that are additional to the carrier’s base rates are surcharges and they are a “necessary part” of FedEx’s pricing strategy on e-commerce business, Brie Carere, the company’s marketing chief, said at a conference call with analysts last month.