FedEx will hike shipping rates as retailers see e-commerce costs climb higher

Retailers will continue to see fast-rising prices for mailing parcels as the transportation and logistics powerhouse FedEx Corp. today said it would increase its shipping rates beginning January 4, following news that the country’s major parcel carriers had all previously announced price hikes for the holiday peak season.

The Memphis-based package delivery carrier said the increase would allow it to “continue investing in service enhancement, fleet maintenance, technology innovations, and other areas to serve customers more effectively and efficiently."

According to the company, its FedEx Express, FedEx Ground, and FedEx Freight divisions will all institute a price increase of 4.9% for most services and regions. In addition, the company will roll out increased surcharges on January 18 for activities such as additional handling, “high cost service areas,” and “international out-of-delivery-areas.” FedEx also plans to add late fees for unpaid invoices and for fuel surcharges.

The news comes just weeks after parcel carriers nationwide said they would boost package delivery prices during the winter holiday peak shopping season, including rates at UPS Inc., FedEx Corp., the U.S. Postal Service (USPS), and Pitney Bowes Inc.

Most of those companies said the decision was driven by market conditions such as a spike in e-commerce volumes driven by work-from-home policies during the Covid-19 pandemic. At the same time, the freight sector is seeing constrained freight capacity both in the air cargo sector and in trucking markets, due to a large number of idled vehicles left sitting on the sidelines during the pandemic.

As a consequence, some industry analysts say that retailers will be forced to pass some percentage of these price hikes down to consumers, or face potential bankruptcy from the high cost of delivering their goods to buyers’ individual homes instead of making less expensive bulk shipments to storefronts.