FedEx has announced its 2022 peak season surcharges and pricing, giving businesses like yours the time to prepare your Q4 budgets. While the increase doesn’t come as a surprise, it does arrive as many companies face increasing price pressures and slowing consumer demand. Whether you’ve been spared difficulty in recent months or are still struggling to respond to high fuel surcharges and prior capacity issues, here’s a look at what to know and watch for the rest of this year.
FedEx’s updated rates explained
Consistent with years prior, FedEx has unveiled its peak season surcharges to help companies address year-end sales and delivery demands. While we’re still waiting to see the changes from UPS and others, now is the perfect time to dig into the FedEx 2022 peak season surcharges. You can find the full release here, and we’ve created a chart with the most important details below.
Note: FedEx dropped its 2021 peak surcharges earlier this year, making it a more cost-effective carrier for many shipments that are assessed Additional Handling and Oversize fees. These peak 2022 increases are likely to bring it more in line with current competitor rates.
Multiple cycles starting on Labor Day
The first big takeaway from the FedEx 2022 peak update is that most surcharge types will run two or more cycles starting Labor Day, September 5, and running through January 15, 2023. FedEx’s cycles started in October in prior years, so the early date may catch some off guard or unprepared.
The September charges include a $3.45 per package handling surcharge that climbs to $6.55 per package on October 3. An “oversize charge” has the same schedule, starting at $39.50 and then increasing to $68.75 per package in October.
FedEx Ground Economy (formerly known as SmartPost), a contract-only service, has a peak surcharge rate of $1.50 per package starting on Halloween. This fee increases to $2.50 per package on November 28 and reduces back to $1.50 from December 12 through January 15.
As FedEx prepares for high demand during peak holiday season, we are adjusting our networks to best deliver for our customers. We again anticipate the surge in residential volume to carry over into the new year – FedEx 2022 peak announcement on August 5
Residential delivery charge tables
FedEx also published a list of residential delivery charges for its Express and Ground domestic services. These fees are adjusted weekly and depend on shipping volume. Some analysis indicates these fees have covered the bulk of holiday traffic in recent years, though they point out that the weekly adjustment schedule is new to 2022.
Per-package surcharges for FedEx Ground services range from $1.25 to $6, depending on volume. Its Express air and international fees range from $2.25 to $7 per package.
How should you respond?
There are two core actions that eCommerce companies should take right now:
- Update your holiday projections and plans. Keep the rate increases in mind when planning margins for holiday sales. These increases will level the playing field so that FedEx rates are closer to existing prices from UPS and others.
- Discuss actions with your partners. Changes in rates, volume, and carrier preference can impact your supply chain in various ways. FedEx moving in line with other pricing can make it a good time to evaluate multiple carriers for performance and reliability. Discuss those options with your customer success partner to see where you can shift. Provide updates of your peak projections to make it easier for 3PLs like Red Stag to work to ensure you’ve got capacity come Black Friday.
FedEx is telling us that its network is stronger this year and can support our needs with reduced risk for capacity and other issues that have occurred since the onset of the pandemic. Review the pricing and look for ways to make FedEx work for you. Getting that right involves understanding the landscape and working with your supply chain partners, so here are a few other things to consider.
What to watch: Other recent carrier news
The FedEx 2022 peak updates don’t happen in a vacuum, and the market is waiting for the other shoe to drop when UPS and regional partners announce their increases. Beyond those costs, we encourage companies to keep an eye on other moves happening with carriers and the overall supply chain. Declining diesel prices and shifting spot rates will impact some of your costs, but networks are also changing the inbound space.
UPS has published an update to its inbound freight rates from China Mainland, Hong Kong SAR, and Macau SAR to the U.S. Starting August 14, Express Freight and Express Freight Midday rates will drop from $2.04 per pound to $1.70 per pound. Similarly, the express services for other Asia regions to the U.S. will decline from $1.34 per pound to $0.66 per pound. That pricing update impacts Australia, New Zealand, Vietnam, Japan, Korea, Malaysia, Thailand, Indonesia, Singapore, Philippines, and Taiwan.
That decreasing peak surcharge rate may help you with any final inbound freight to get ready and position inventory ahead of the year-end sales season. If FedEx’s peak increases hit before UPS’ do, then the carrier may also be a more compelling option for your last-mile moves.
The other news stories companies will want to keep an eye on are the public discussions between FedEx and its contractors. Recently, the carrier’s Ground contractor formed an advocacy group seeking compensation increases amid higher fuel and equipment costs, among other concerns. It’s unclear what, if any, impact this would have during peak season, barring a major escalation in tensions.
Red Stag is ready to help
Monitoring 2022 peak season surcharges from FedEx and others can keep your operations prepared and avoid surprise increases or hits to margins. Red Stag Fulfillment wants to be a partner in protecting your operations and keeping you moving this peak season.
We get peak right by working together. Red Stag has been having peak season discussions with FedEx and others since the start of the year. These aim to secure capacity and minimize disruptions wherever possible. We’re asking our partners to discuss and update peak projections with your Client Success manager. Using the most up-to-date projections and assessments helps us secure needed space and trailers, minimizing the chance that your holiday sales will face delays.
Now is the perfect time to reach out to our experts to update your projections, ask about testing carrier options as pricing reaches parity, or seek out expert advice to take advantage of lowering inbound freight costs. Red Stag is just a click away.