Subscribe to our free, weekly email newsletter!


FedEx Ground rolls out 2011 rate hikes

By Jeff Berman, Group News Editor
December 06, 2010

FedEx recently announced it will up its rates for its FedEx Ground and FedEx Home Delivery units by an average of 4.9 percent, which will take effect on January 3, 2011.

Company officials said that the full average rate increase of 5.9 percent will be partially offset by adjusting the fuel prices threshold at which the fuel surcharge begins and reduce the fuel surcharge by one percentage point.

This news follows a late September announcement in which FedEx raised rates for FedEx Freight, its less-than-truckload unit, by 6.9 percent (effective November 1, 2010), and FedEx Express for U.S. domestic and U.S. export services by an average of 3.9 percent, effective January 3, 2011.

When these rate hikes were announced, FedEx said it will be implementing a change to the dimensional weight volumetric divisor from 194 to 166 for U.S. domestic services.

In early November, UPS also made similar rate increases, with UPS Ground packages up 4.9 percent and a net increase of 4.9 percent on all air express and U.S. origin international shipments.

And like FedEx UPS made changes to its dimensional weight volumetric divisor, with U.S. Domestic UPS Air Services and U.S. Domestic UPS Ground Services (for packages 3 cubic feet or larger) changing from 194 to 166, among others.

In a recent interview with LM, Jerry Hempstead, principal of Hempstead Consulting, said that these dimensional weight changes will be a major hit to shippers.

“It is all margin improvement for both UPS and FedEx,” he said. “They do no additional work, make no additional capacity investment but get a windfall of incremental revenue on the same shipments they handle today.”

Hempstead these dimensional weight changes are good for shareholders and bad for shippers. He added that he was surprised at how low UPS’s ground increase is, considering that with only two ground parcel national carriers, whatever rate hikes one company announces is matched by the other, with the differences occurring in the discounting.

Click here for more FedEx stories.


Be sure to attend our On-Demand Webcast:

2010 Warehouse/DC Benchmark Study

Join Group Editorial Director Michael Levans and the research team of Derek Sorensen and Norm Saenz from TranSystems as they put context behind this annual survey designed to give the market the most up-to-date snapshot of current activities and trends in warehouse and DC management. FREE STUDY DOWNLOAD!!

sponsored by:


About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Congested U.S. port terminals, harbor and over-the-road truck and driver shortages, slower trains and longer rail terminal dwell times due to increased domestic rates have not only disrupted service but also driven intermodal rates and cargo handling costs up sharply.

Southern California shippers are getting a break on container dwell expenses for the next ten days as the Port of Long Beach announced that it had added an extra three days to the time that overseas import containers can remain on the docks without charge.

The long-simmering court battle over whether FedEx Ground’s workers are independent contractors or employees appears headed to the appellate courts—and maybe the U.S. Supreme Court.

Carload volume headed up 4.3 percent to 298,376, and intermodal units, at 273,376 containers and trailers were up 4.8 percent annually.

In light on various service-related freight railroad service issues, the Department of Transportation’s Surface Transportation Board (STB) recently announced it is now requiring Class I railroads to publicly file weekly data reports on service performance. These weekly reports are slated to begin on October 22.

Article Topics

News · UPS · FedEx · Jerry Hempstead · All topics

Comments

Post a comment
Commenting is not available in this channel entry.