FedEx Express announced at the end of October it would raise its net average shipping rate by 4.9%– the carrier’s largest increase in seven years. The rate hike is composed of a 6.9% increase in standard list rates offset by a 2% reduction in the fuel surcharge.
Though FedEx Express emphasizing the net increase, fluctuating fuel surcharges will likely make the increase closer to 6.9% by the end of 2008, says Tim Sailor, principal at Long Beach, CA-based transportation consultancy Navigo.
“That fuel surcharge is always rising,” Sailor says. “Shippers really haven’t realized the 2% fuel surcharge reduction FedEx Express offered last year.”
For both 2006 and 2007, FedEx Express’s net average shipping rate rose 3.5% after it factored in the 2% reduction in the fuel surcharge.
Sailor says shippers who signed multiyear contracts with FedEx Express will probably not be affected by the overall increase, though they will continue to see swinging fuel surcharges.
“High-volume shippers [spending more than $1 million in transportation] still have the ability to negotiate their rates,” Sailor says. “Though the list rates are going up, discounts for shippers that will do a certain volume will get better.”
Carriers FedEx Ground, UPS, and DHL are expected to announce their rate increases in the next few weeks. Sailor anticipates an average 4% increase by those three carriers, after they each implement a 2% reduction in their fuel surcharges.