FedEx Announces General Rate Increases for 2018

October 5, 2017 at 10:33 AMLeah Palnik
FedEx Announces Rate Increases for 2018

You may have heard that FedEx announced its General Rate Increases (GRI) for 2018. In the past few years, UPS has been the first of the two major small package carriers to make an announcement for the coming year, but this time FedEx is taking the lead.

Here are the announced average increases that will take effect January 1, 2018:

  • 4.9% for FedEx Express domestic and international services
  • 3.5% for FedEx One Rate
  • 4.9% for FedEx Ground and FedEx Home Delivery
  • 4.9% for FedEx Freight

As it’s important to remember every year, these averages don’t paint a complete picture. The zones you typically ship to and the services you typically use could dramatically affect the actual increase you’ll see on your invoices. Some are much higher than the average, while others are much lower or remain the same. UPS is likely to make its announcement for 2018 rates soon and if history is any indication, the averages will be similar to its competitor. 

FedEx and UPS traditionally have similar average rate increases, but in the last few years their base rates have diverged a bit. Ground base rates used to be nearly identical, but in 2017 the two carriers took different increases in different zones, making it harder to compare apples-to-apples. On top of that, they also implemented slightly different approaches to dimensional (DIM) weight pricing, by using different DIM factors. As a result, looking at what would be most cost effective for you and how your rates will change has become more complicated.

Another trend that we’ve seen from UPS and FedEx is the announcements of additional changes throughout the year, separate from the GRIs. The announced averages have gone down in recent years, but these mid-year adjustments can sometimes have a larger impact.

One example of this is the new peak season surcharges that UPS is implementing for the holidays this year. UPS recently announced that it will apply a 27-cent charge on all ground residential packages during its busiest weeks in November and December. FedEx is taking a notably different approach and forgoing any additional holiday residential surcharges except for  packages that are big or bulky enough to require special handling.

Both UPS and FedEx attribute charges like this to the rise of e-commerce, which has brought a sharp increase in residential shipments, particularly oversized items like furniture and exercise equipment. These kind of parcel shipments put a strain on their networks and their sorting machinery, and they've been finding ways to make up for these costs.

FedEx is also making a couple of additional moves to address the changing nature of parcel shipments in 2018. It will now apply a surcharge for shipments with third-party billing – mimicking a move that UPS made at the beginning of 2016. FedEx will also begin applying a DIM factor of 139 to all SmartPost parcels, effective January 22. UPS already applies DIM weight pricing to SurePost packages, but uses a higher DIM factor for packages 1,728 cubic inches and under.

Every year, when the new rates for UPS and FedEx are out, PartnerShip does a complete analysis so you can determine what effect it will have on your business. Subscribe to the PartnerShip Connection blog to be alerted when it’s out so you can start planning for the new year and learn how to mitigate the rising costs of small package shipping. 

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UPS Adds Residential Holiday Shipping Surcharges; FedEx Will Not Follow

August 30, 2017 at 2:59 PMJerry Spelic

The holidays are approaching and that means an increase in small package shipping. If you use UPS for residential Ground shipping, you’ll also see new holiday residential shipping surcharges from the Atlanta-based company.

UPS announced that it will add a 27-cent charge on all Ground residential packages sent between November 19 and December 2. This includes two of the busiest online shopping days of the year, Black Friday, which is November 24 and Cyber Monday, which is November 27.

The charge hibernates for two weeks, then returns December 17 through December 23, during which time all Ground residential deliveries will see the additional 27-cent charge, plus an additional 81-cent charge for next-day air shipments or an additional 97 cents for two-day or three-day delivery.

According to financial news outlet Bloomberg, the surcharges will increase the cost of UPS residential deliveries by roughly 3 percent.

The stated reason for the company’s surcharge increases is that online shopping and e-commerce has grown significantly over the last twenty years and UPS sees a huge influx of packages during the holiday shopping season that puts stress on its systems, processes and machinery. On an average day, UPS processes around 19 million packages but during the holiday season, that number swells to 30 million packages.

In order to meet demand, UPS says it has to add planes, trucks, and thousands of employees; and the surcharges are necessary to offset the additional cost of the holiday package surge.

“UPS’s peak season pricing positions the company to be appropriately compensated for the high value we provide at a time when the company must double daily delivery volume for six to seven consecutive weeks to meet customer demands,” according to Glenn Zaccara, a spokesperson for UPS.

UPS is also adding a Large Package surcharge of $24 and a Over Maximum Limit surcharge of $249. Both of these UPS surcharges are effective November 19 through December 23, 2017.

In a notable departure from UPS, FedEx will not apply residential surcharges this holiday season, except for packages that are big or bulky enough to require special handling.

Between November 20 and December 24, 2017, FedEx Express and FedEx Ground in the U.S. and Canada will increase the additional handling surcharge by $3 per package and $25 per package for oversize packages. The largest surcharge of $415 per package is only applied to packages that exceed the FedEx maximum size limit and cannot move through its sorting equipment.

With the additional handling surcharge for oversized packages, both UPS and FedEx are trying to discourage large and heavy, odd-sized shipments, because they cannot pass through its automated systems and require additional handling. In fact, the volume of oversized packages handled by FedEx Ground has increased 240 percent during the past ten years and is now 10 percent of the ground operation’s volume. This is “largely driven by expansion of e-commerce into sports equipment, furniture, mattresses and other things that weren’t largely available on e-commerce 10 years ago,” according to Patrick Fitzgerald, senior vice president of marketing at FedEx.

It's important to evaluate how you these changes might affect your shipping costs. Through a PartnerShip-managed shipping program, you can receive significant discounts on select FedEx services - resulting in savings that can help to offset cost increases like these. If you're not sure if you qualify for one of our small package shipping programs, contact us and we'll find the solution that's right for you.


A Closer Look at DIM Weight Pricing

November 29, 2016 at 2:28 PMLeah Palnik

Dimensional (DIM) weight can be a tricky subject to master. All of the changes that small package carriers UPS and FedEx have made in recent years don’t help. In 2017, FedEx is lowering the DIM factor for domestic packages to 139 from 166. UPS is making the same change for domestic packages less than or equal to 1,728 cubic inches. So how will this change affect you?

First, it’s important to understand what dimensional weight is and how it’s calculated. Dimensional weight pricing is a common industry practice that sets the transportation price based on package volume, in relation to its actual weight. Carriers use dimensional weight in order to account for the space packages take up on their trucks and planes. This allows for a more precise way to charge for their services.

The basic formula for calculating DIM weight is (length x width x height)/DIM factor. For most small packages, the DIM factor will now be 139. The one exception is UPS domestic packages 1,728 cubic inches and under. UPS originally didn’t announce any changes to its DIM weight pricing for 2017, but it followed suit after FedEx announced it would be using 139 as the DIM factor for both domestic and international packages. Let that serve as a reminder to stay informed, as UPS and FedEx are continually making updates to their rates, surcharges, and DIM weight rules.


Once you calculate your DIM weight, compare it to your actual weight. The greater of the two will become the billable rate. When deciding if you need to make any adjustments to how you ship your packages in the upcoming year, start by doing an analysis of your common shipments. Look at those package measurements, calculate the cubic inches (length x width x height), and find the DIM weight to determine your billable weight. For an easy way to determine your billable weight, click here to use our DIM weight calculator.

UPS and FedEx base rates differ quite a bit more in 2017 than they have in the past. Because of this, you’ll want to make sure you’re not just using DIM weight pricing to determine which carrier to use. Download our free white paper, Understanding the 2017 Small Package Rate Increases, for a detailed analysis on the new rates.

Since density is the name of the game, make sure you review your shipment packaging to reduce the size of your package if you can. Don’t use oversized boxes that contain unused space and, where possible, consolidate orders. By being more efficient with your packaging, you’ll ensure you’re not paying to ship empty space.

One of the best ways to offset the rate increases and DIM weight pricing changes is to ensure you’re maximizing any discounts available to you. PartnerShip offers association members discounts on select FedEx services. If you're not sure if you qualify for one of our small package shipping programs contact us and we'll find the solution that's right for you.

Understanding the UPS and FedEx Rate Increases

November 11, 2016 at 8:37 AMLeah Palnik

Every year small package carriers FedEx and UPS evaluate their shipping rates and make adjustments that can have a substantial effect on you and your business. The UPS rate increases take effect on December 26, 2016, while the new FedEx rates take effect on January 2, 2017. As always, how much more expensive your particular small package shipments will be in the new year depends on many factors, including shipment volumes, sizes, weights, and modes.

Here are some quick facts: 

  • FedEx Express and International rates are increasing an average of 3.9%
  • UPS Air and International rates are increasing an average of 4.9%
  • FedEx Ground and Home Delivery® rates are increasing an average of 4.9%
  • UPS Ground rates are increasing an average of 4.9%
  • The dimensional divisor for FedEx domestic packages is changing from 166 to 139
  • UPDATE: the dimensional divisor for UPS domestic packages greater than 1,728 cubic inches is changing from 166 to 139
  • FedEx SmartPost®, FedEx One Rate®, and UPS SurePost® rates will be changing

The important takeaway when thinking about your shipping expenses in 2017 is that the announced average increases paint an inaccurate picture of the true impact these new rates could have on your business. The shipping experts at PartnerShip® have dug into the details and analyzed the new rate tables to assess the true impact to shippers and help you make sense of these changes. Learn more about how the 2017 rate increases will affect your shipping costs by downloading our free white paper!

Download Now! Understanding the 2017 Small Package Rate Increases

Get winning! Enter the FedEx Advantage® $25,000 Get Ready Sweepstakes

October 13, 2016 at 9:40 AMLeah Palnik

Get ready for a chance to win! FedEx is giving PartnerShip customers a chance to win up to $10,000, or over 100 other prizes, in the $25,000 Get Ready Sweepstakes. By enrolling in a PartnerShip-managed shipping program, association members will be automatically entered in the sweepstakes. If you are already enrolled in one of our programs, you simply have to join My FedEx Rewards. Then you’ll have a chance to earn up to 51 additional entries.*

Imagine how you could invest in the success of your business with these prizes:

  • $10,000 Grand Prize (1) 
  • $1,000 First Prizes (10) 
  • $50 Second Prizes (100)

Get started. Keep saving.
PartnerShip customers enjoy significant savings on select FedEx® services. The program is free to join and there are no minimum shipping requirements. What’s more, you may be eligible for other special offers and promotions.

PartnerShip works with over 120 major trade associations, across many industries, to provide their members with time- and money-saving tools to help them be successful in all facets of shipping and logistics. If you belong to an association we work with, take advantage of our free shipping benefits today and get in on the $25,000 Get Ready Sweepstakes. If you're not sure if you qualify for one of our association shipping programs contact us and we'll find the solution that's right for you.

*Limit 52 total entries. NO PURCHASE NECESSARY. Void where prohibited. The $25,000 Get Ready Sweepstakes is sponsored by FedEx Corporate Services, Inc. Open to legal residents of the 50 United States and Washington, D.C., age 18 or older who are members of an eligible FedEx Advantage affiliate as of 9/11/16. Begins 9/12/16; ends 11/4/16. For rules, go to smallbusiness.fedex.com/get-ready-rules.

FedEx and UPS Announce 2017 Rate Increases

September 26, 2016 at 10:50 AMLeah Palnik

FedEx recently announced changes to its shipping rates for 2017. In a surprising move, these new rates do not match the increases that UPS announced earlier this month. FedEx and UPS typically announce similar rate increases annually, making this year rather unique.

The new rates for FedEx will take effect on January 2, 2017. FedEx Ground services will increase an average of 4.9%, matching the announced average increase for UPS Ground that will take effect on December 26, 2016. However, while UPS Air services will be increasing an average of 4.9%, FedEx Express rates will only be increasing an average of 3.9%. This is the first of many differences between the announced changes from the two major carriers.

FedEx will also be lowering the dimensional (DIM) divisor to 139 for domestic shipments, matching the divisor currently used for international shipments. Many shipments that were not previously charged at the DIM weight will now be affected, which will have a significant impact on overall shipping costs. In 2011, the dimensional divisor decreased from 194 to 166, and in 2015 both FedEx and UPS began applying DIM weight pricing to all ground shipments. At this time, UPS hasn’t announced any changes to its DIM weight pricing.

In addition, FedEx announced a change to its fuel surcharges. Effective February 6, 2017, the fuel surcharge percentage will be subject to weekly adjustment, rather than monthly. There’s currently a two month lag time between the US government fuel indexes and the fuel surcharges. This change will better align them by reducing the lag time to two weeks.

As a shipper, it’s important to understand how these changes will affect you and your business. As we’ve done in past years, Partnership will conduct a full analysis to help you make sense of these changes. Be on the lookout for our white paper on the topic before the New Year!

In the meantime, it's important to start evaluating how you can combat these rises in shipping costs. Through a PartnerShip-managed shipping program, you receive significant discounts on select FedEx services - resulting in savings that can offset these rate increases. If you're not sure if you qualify for one of our small package shipping programs contact us and we'll find the solution that's right for you.

Changes Coming to the FedEx Additional Handling Surcharge

April 28, 2016 at 1:36 PMLeah Palnik