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

Logistics Management Group News Editor Jeff Berman had an opportunity to interview Derek Leathers, President and Chief Operating Officer of Werner Enterprises, at this month's NASSTRAC Shippers Conference and Transportation Expo in Orlando. They discussed various aspects of the truckload market, including prices, fuel, and regulations.

During this webcast our presenters will apply the findings of the 23rd Annual Trends & Issues in Transportation and Logistics Study to the world of shipper-carrier decision making. They'll examine the primary aspects that will influence the future direction for shipper-carrier decision-making.

For February, the month for which most recent data is available, the SCI dropped to -1.0 from January’s 2.6, with FTR explaining that the short term positive impact from one-time adjustments for rapidly dropping diesel prices and the suspension of the 2013 motor carriers hours-of-service expires later this year.

Seasonally-adjusted (SA) for-hire truck tonnage in March was up 1.1 percent on the heels of a revised 2.8 percent (from 3.1 percent) February decline, with the SA index at 133.5 (2000=100). This is off 0.3 percent from the all-time high for the SA of 135.8 from January 2015 and is up 5 percent annually.

Intermodal volume was up 8.1 percent annually at 280,016 containers and trailers. This outpaced the week ending April 11 at 270,463 and the week ending April 4 at 271,127. AAR said this tally marks the second highest weekly output it has ever recorded as well as the first time container and trailer traffic was higher than carloads for a one-week period.

Article Topics

News · UPS · FedEx · Jerry Hempstead · All topics

Comments

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