Last month FedEx announced that they will be their raising shipping rates once again in 2018 for FedEx Ground, FedEx Express, and FedEx Freight by an average 4.9%. FedEx Ground Multiweight and Smartpost rates will also change. Since there are many changes in rates, we will split these up into a series of posts to help you fully understand what will take place starting January 1, 2018. Lets dive into the 2018 FedEx Ground and Home Delivery rate increase right now.
FedEx has increased the Ground rates by 4.9% on average for five years in a row, since 2014. But what is the true impact of the increase to your business? The 4.9% increase is an average that is heavily skewed toward higher increases for lower weight packages. Meaning the majority of small parcel shippers will see an actual increase over 4.9%
Actual Rate Increase
The largest actual rate increase is in the sixteen to twenty pound shipment range. These shipments will see a 5.54% price increase. The next largest price increase is six to ten pound packages, the effective price increase is 5.40%. The lowest price increase are shipments weighing 100 pounds and greater. These heavy packages will only see an average price increase of 3.83%. The average price increase of all weights and zones is 4.94%.
For packages weighing less than 20 pounds, the true rate increase is greater than the average 4.9%. This is possible when the carriers lower the rate increase on higher weight packages. There are 1050 variations of weights and zones for Ground packages, of these, 264 zone/weight combinations are over 4.9%. This allows FedEx to place higher increases on the more frequently used weight and zones.
Minimum Net Charge
Many shippers do not realize much of their rate discounts due to the minimum net charge, this is increasing as well. The minimum net charge for a FedEx Ground package will be $7.58 in 2018, a change from $7.25 last year. This is an increase of 4.55%.
Rate increases are inevitable, each year FedEx and UPS will increase the price you pay for each package. These higher rate increases are skewed toward lower weight packages that are the bulk of most small parcel shippers. If the average weight of your packages are above 50 pounds, your rate increase is lower than 4.9%. Have questions about how these changes in the cost of transportation impact your bottom line? Contact Refund Retriever for a full review of your contract rates.