FedEx hit large shippers with a new round surcharges in advance of the busy holiday season.
The surcharge cycle will begin with increases in the cost of special deliveries and continue into 2022 with large-scale charges.
This move comes just days after USPS introduced holiday surcharges.
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FedEx is gearing up to a busy holiday season following a year of labor shortages, increased demand and high labor costs. To help with the rush, the shipping company has introduced a new set of delivery surcharges.
FedEx Ground Economy deliveries will see a $1.50 per-piece price increase starting Nov. 1. This is the main surcharge season. This applies to residential deliveries for small- and medium-sized companies and covers most typical consumer packages.
The first surcharge will expire on November 28th, but it will increase to $3 per package by the next day to compensate for Cyber Monday and Black Friday purchases. From Dec. 13 through Jan. 16, the surcharge will return to its original $1.50.
A 60-cent-per-piece fee will be levied by the company starting January 17, 2022, for retailers who have shipped holiday surcharge-exempt volumes. This cycle is still in its infancy.
This price increase comes just days after the United States Postal Service announced similar price increases to "extra costs" during holidays. FedEx's private carrier competitor United Parcel Service has also introduced new "peak" surcharges.
Merchants and retailers could feel additional pressures from the new delivery surcharges. Businesses must absorb these increases or pass them along to their customers. Major companies are struggling to maintain their margins due to a rise in transport costs. This has led to higher consumer prices at restaurants and stores.
Since the outbreak of the coronavirus pandemic, delivery giants UPS, FedEx, DHL and FedEx have been hit with a slew of problems. Ordering spiked after people were put on lockdown. As the US economy reopened this year, businesses had to deal with labor shortages. This included a critical shortage in truck drivers and rising fuel costs.
FedEx is now offering perks and pay raises to its current logistics workers. FedEx had to limit the number of packages it sent each day to certain businesses last year due to capacity problems in its shipping network.
Ravi Shanker, an analyst at Morgan Stanley, stated previously to Insider that if labor is going to remain tight for a long time, shipping will be more costly.
FedEx didn't respond to my request for more information about the surcharges.