FedEx Announces 2013 Small Package Rate Increases

09/20/2012 — Scott Frederick

As part of their recent investor relations conference call, FedEx announced their 2013 annual rate increases for domestic and international express shipments. The new rates will become effective on Monday, January 7th 2013. As they have for the last several years, FedEx announced an overall increase of 5.9%, along with a 2% reduction in the fuel surcharge, for a net increase of 3.9%.

A recent analysis done by the folks at Parcel magazine indicates that domestic express prices are actually increasing by an average of 6.54%, and international rates are up an average of 6.12%. As in previous years, increases are targeted at specific service levels and zones, with lane by lane increases ranging from a low of 3% to a high of over 10.5%, so shippers will need to do an "old vs. new" calculation to determine the actual impact on your shipments. Parcel magazine also notes that the increases are somewhat lower on the more expensive premium services, and higher on the deferred services. This is to minimize the impact of trading down to economy services. FedEx will announce their 2013 ground rates later in the year.

The Parcel magazine article outlines the specific increases by service level as follows:

FedEx First Overnight
This premium priced early next day service shows an average 5.76% increase, with highest increases to Zone 8-US shipments travelling more than 1,800 miles. Specific increases range from 3.98% to 6.35%.

Priority Overnight
Average 5.99% increase to this next day 10:30 AM service, with somewhat higher increases to zones 5 through 8, along with shipments to Alaska and Hawaii. Letters are showing a bit bigger hit compared to packages. Specific increases range from 4.01% to 6.50%.

Standard Overnight
Average 6.56% increase to this next afternoon service. As with PO, FedEx has targeted somewhat higher increases to zone 5 through 8, along with Alaska and Hawaii. Note that the overall increase is a bit higher compared to Priority Overnight. Specific increases range from 3.01% to 7.0%.

FedEx 2 Day
Average 6.65% increase, with heaviest increases to zones 2, 3 and 4. These shipments would be good targets for conversion to ground. Specific increases range from 3.01% to 7.5%.

FedEx Express Saver 3 Day
Hefty increases, averaging 7.74%. Savvy shippers will want to compare costs and transit times with ground. In some cases, ground shipments are quicker than deferred air, and at a considerably lower price point. Is FedEx encouraging shippers to move shipments from air to ground? We think so. Specific increases range from 6.4% to 10.26%.

International Priority Export
Increases range from 2.5% to 8.5%, and average 6.47%. Hardest hit are shipments to Hong Kong, Singapore and Taiwan (7.53%), while shipments to Germany and Italy get off relatively light, with increases of just 2.7%.

International Economy Export
Increases range from 3.99% to 8.0%, with average increases of 6.69%- a bit higher than the faster, more costly International Priority. As with IPE, shipments to Hong Kong, Singapore and Taiwan show the biggest increases, at 7.88%, with the lowest increases to Saudi Arabia, the Czech Republic and Russia, at 4.8%.

International Priority Import
Increases range from 2% to 8.8%, averaging 5.85%. These are inbound international shipments into the US, paid in US dollars. Keep in mind that you can also tender the same shipment in a foreign country, so you will want to compare rates and currency equivalents. AFMS has discovered savings of 20% or more, just by taking advantage of the lowest overall cost country and currency. Most shipments from Central and South America increased just 2.26%, while imports from Japan and South Korea are up 8.51%.

International Economy Import
Increases range from 2.0% to 9.0%, and average 5.48%. Imports from Germany and Italy are up just 2.21%, while inbound shipments from Australia are up 8.93%.

Accessorial Charges
Address Correction up $1 to $12 (9.1%).
Residential Surcharge up $0.20 to $3.20 (6.7%).
Declared Value up $0.05 to $0.85 per $100 coverage (6.3%). Minimum charge up $0.15, to $2.55 (6.3%).
Commercial DAS up $0.15 to $2.15 (7.5%).
Residential DAS up $0.25 to $3.25 (8.3%).
Extended DAS Residential up $0.25 to $3.50 (7.7%).
Indirect Signature Required up $0.25 to $2.25 (12.5%).
Missing or Incorrect Account Number up $1 to $11 (10%).
Payor Rebill up $1 to $11 (10%).

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