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Everything You Need to Know About the 2018 Rate Changes from FedEx

It’s that time of year again. FedEx recently released information regarding its 2018 general rate increases, and here’s what you need to know:

  • Overall, the company is again increasing major transportation service rates.
    • FedEx Express, FedEx Ground and FedEx Freight rates will increase by 4.9% on average.
    • FedEx One Rate pricing will increase by 3.5% on average.
  • They’re raising several charges temporarily during the upcoming holdiay season beginning November 20, 2017
    • The Additional Handling Surcharge will increase $3 per package to $14.
    • The Ground Unauthorized Package Charge will increase $300 per package to $415.
    • The Oversize Charge will increase $25 per package to $97.50.
  • They’re also changing how dimensional weight and oversize charges will be triggered effective January 22, 2018
    • The Additional Handling Surcharge will apply to any FedEx U.S. or International Express package that measures greater than 48 inches along its longest side. This follows a similar decrease from 60 to 48 inches on Ground shipments in 2016.
    • The Oversize Charge will apply to any FedEx Express U.S. package or FedEx Ground package exceeding 96 inches in length or 130 inches in length + girth (2x height + 2x width). The shipping charges for an Oversize package will be based on the greatest of the package’s actual rounded weight, dimensional weight, and 90 lbs.
    • A dimensional factor of 139 will apply to FedEx SmartPost packages.
    • The FedEx Freight Over Length Surcharge of $85 will apply to shipments that contain any handling unit with a dimension of 8 feet or greater in length and less than 12 feet in length.
  • And there’s new charge, too, effective January 22, 2018
    • A Third-Party Billing Surcharge of 2.5% of total shipment charges will apply to FedEx Express and FedEx Ground shipments that are billed to a third party.

So what should you do now?

  • Examine your FedEx contracts closely. Look for negotiation opportunities that can help protect you against general rate increases, as well as against the hidden, non-rate related cost drivers that may produce unexpected cost increases.
  • Consider negotiating higher than standard dimensional factors. Dimensional factors determine the calculated dimensional weight that, when divided by total volume, dictates when FedEx can bill a freight charge based on more than the actual weight. The lower the dimensional factor, the higher the calculated dimensional weight and the greater likelihood that you will pay freight costs based on the higher weight.

Just how big of an impact can this make? Last year, FedEx reduced their standard dimensional factor from 166 to 139 on FedEx Express shipments. This one change has the potential to make a seemingly standard 5% increase in rates result in a 22% increase in cost for a typical shipment billed using dimensional weight.

  • Consider negotiating lower rates or a waiver of certain surcharges. If you’re planning to commit to a high volume of business with FedEx, this could be a valuable bargaining chip.
  • Double check your packaging. Make sure you’re shipping products in packages with the smallest possible volume. This will help minimize the impact of freight charges billed using dimensional weight, as well as the myriad additional surcharges that are incurred by ever-shrinking dimensional triggers.

Want more details on the FedEx rate changes? Check out the company’s announcements here.

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