FedEx to Skip Holiday Surcharges for Most Orders--Update
August 03 2017 - 10:15AM
Dow Jones News
By Paul Ziobro
FedEx Corp. said it won't charge additional fees for most orders
during the holiday season, in contrast with United Parcel Service
Inc., undercutting its main rival as they battle for e-commerce
customers.
The decision by FedEx, announced Thursday, is a gamble that it
can cover the extra costs during a period when daily volume can
double to more than 26 million packages. It will charge extra fees
for deliveries requiring additional handling, which include larger
and irregularly shaped packages, as well as oversize packages,
which now make up 10% of its ground-shipping volume.
UPS has set considerably different pricing for the holiday
season. In June it said it would charge extra for most packages
delivered to homes around Black Friday and Christmas. While the
per-package fee ranges from 27 cents to 97 cents, analysts estimate
that UPS could generate tens of millions in revenue from the
fees.
Patrick Fitzgerald, a FedEx senior communications and marketing
executive, said the decision wasn't a competitive response to UPS.
"This is really about ensuring that we price effectively," he said
in an interview.
UPS declined to comment on FedEx's move but defended its
strategy.
"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," it said in a
statement.
Both FedEx and UPS are spending heavily to adapt their networks
to handle the uptick in e-commerce orders they are seeing. Research
firm eMarketer Inc. predicts that online sales will increase 17%
this holiday season to $107 billion, far outpacing the expected
3.1% growth in overall retail sales during the same period.
UPS's surcharges include additional fees on oversize packages
delivered from Nov. 19 through Dec. 23 in an attempt to shift large
parcels to the company's freight network and free up space during
the holiday season. The company has said that it expects most of
its customers will agree to the surcharges.
FedEx is focusing on the largest packages, with extra fees in
effect from Nov. 20 through Dec. 24. They include a $25 surcharge
on oversize packages, which currently are hit with a $72.50 charge
to ship, and a hefty $300 surcharge on so-called unauthorized
packages, which exceed the maximum size that FedEx allows but that
it sometimes delivers at its discretion. Those typically carry a
$115 charge. It is also imposing an additional $3 fee on any
package that requires additional handling.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
August 03, 2017 10:00 ET (14:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
FedEx (NYSE:FDX)
Historical Stock Chart
From Mar 2024 to Apr 2024
FedEx (NYSE:FDX)
Historical Stock Chart
From Apr 2023 to Apr 2024