FedEx Express, Ground, Freight to raise US rates by 4.9%

FedEx Express, Ground, Freight to raise US rates by 4.9%

FedEx announced today that its express, ground and freight services in the United States will increase prices by 4.9% on average from the New Year. The company said the rate changes would come in on 5th January for FedEx Express US domestic, US export and US import services, as Memphis-based FedEx also introduces dimensional pricing for its ground services.

FedEx Ground and FedEx Home Delivery will also increase shipping rates by an average of 4.9%, while FedEx SmartPost services, where the US Postal Service provides the last mile of delivery, will also see a rate increase.

The FedEx Freight rate increase of 4.9% applies to the US, including Alaska, Hawaii, Puerto Rico and the US Virgin Islands, and also for shipments between mainland US and Canada, mainland US and Mexico, and within Mexico.

FedEx announced back in May that it will be applying dimensional weight pricing to all its FedEx Ground services, as a response to the change in nature of shipments. The soaring popularity of online shopping in the United States means packages are often lighter weight, but can be bulky, which has reduced earnings prior to the introduction of pricing based on package size as well as weight.

This year’s annual above-inflation price increase at FedEx in the United States is higher than last year’s 3.9% increase, despite the fact that the US Postal Service lowered many of its competing Priority Mail rates this month in order to win e-commerce business.

The move also comes as some of the larger e-commerce players like Amazon and Google Play are testing out their own delivery operations in a bid to take more control over their business costs.

FedEx made $45.6bn in revenue in its 2014 fiscal year, with operating income coming in at $2.1bn.

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