September 21, 2016

FedEx® Announces 2017 Rates, Lowers Dimensional Threshold

Author: Renee Bingling

The shipping industry knows this story well – parcel shipping giants, UPS® and FedEx® increase their rates in lock-step. This time however, there are some noteworthy changes. UPS began this year's trend by announcing their annual General Rate Increase (GRI) a little earlier than expected and true to form, FedEx followed with its recent announcement; but has deviated from matching UPS rates for the first time in recent years.

 

Here are some highlights from the announcement:

Most Impactful Changes

On January 2, 2017, FedEx Express® and FedEx Ground® U.S domestic dimensional weight advisor will be adjusted from 166’’ to 139’’. It is noteworthy that FedEx has matched their domestic dimensional weight advisor to that of its international import and export, less than two years after the change from 199” to 166”. 

With this adjustment, more than ever shippers need to consider a multi-carrier strategy when it comes to shipping. 

Such multi-carrier options could include regional parcel carriers, many of whom have less-costly dimensional weight policies or the U.S. Postal Service™ for parcels, which does not apply Dimensional Weight (DIM Weight) charges if your parcel travels less than 1,000 miles.  For more about each carrier’s policy on Dimensional Weight, please see here.  

On February 6, fuel surcharges will also be adjusted weekly instead of monthly, which reduces the lag time between U.S. government fuel index changes and its surcharge adjustments to two weeks from two months. Industry experts are buzzing that the move to weekly surcharges may signify that FedEx may be anticipating that fuel costs may increase next year and a weekly adjustment may be best to manage revenue.

Other Noteworthy Changes

  • FedEx Express rates will increase by an average of 3.9% for U.S. domestic, export and import services.
  • FedEx Ground and FedEx Home Delivery® rates will increase by an average of 4.9%, with FedEx SmartPost®  rate also changing.
  • Freight shipment rates will increase by 4.9% and customers will be charged more to ship large packages.
  • FedEx Freight® extreme length surcharge will increase from $88 to $150 and will be applied to shipments 12 feet or more compared to the prior 15 feet. 

How does this affect you?

A change to Dimensional Weight can have serious cost consequences for an organization if they are not planning effectively and do not have the visibility to know if this is a problem.  A 12 x 8 x 8 small box that is commonly used to ship electronics with an actual weight of 1lb would have given you a dimensional weight of 5lbs less than five years ago.  Starting in 2017, however, the dimensional weight on that same package is 8lbs.  In dollars and cents, that package might have cost you around $12 to ship ground just a few years ago; in 2017, it could cost you $14-15.  

For more information, visit our shipping blog.

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