1. Fuel Me
Twice…
FedExwill waste little time
in hitting customers where it hurts
– their pockets – based on the latest
in a long-running, well-documented
chain of price increases.
In a release posted to its website on
September 15, the world’s sec-
ond-largest shipping company offi-
cially announced that it will increase
shipping rates by an average of 4.9
percent, effective January 4, 2016.
The announcement was merely a
formality, since shippers have grown
accustomed to these increases at the
turn of each calendar year.
But while the timing and delivery are
always generally the same, there is a
key difference in the 2016 version,
which is that two key facets will be
put in place before 2016. E-commerce
and oversize package shippers will have
to start spending early, thanks to fuel
table changes and unauthorized package
surcharge adjustments that will take
effect November 2, more than two full
months before the rest of the increases
are implemented.
FedEx pointedly stated that unautho-
rized packages – those that exceed the
FedEx Ground published length and
weight limitations – will cost more and
will be handled solely at FedEx Ground’s
discretion.
Less clear, however, was the amount
by which the surcharges for fuel and
unauthorized shipments will rise, and
probably for good reason. The publish-
ing of the new fuel tables and a deeper
dive into the actual rate structure
highlight substantial changes that
will cost customers significantly. A
package that exceeds the published
maximum dimensions in the FedEx
Ground network will cost $110 –
91.3 percent more than last year
– effective November 2, and the fuel
surcharge will increase at least 0.75
percent, and could spike nearly two
percent depending upon the per
gallon price of diesel or jet fuel.
The timing, of course, is unarguably
dictated by the peak season – the
heavy shipping period surrounding
the holidays that has plagued both
carriers in each of the last two years
– that will kick off just a few days
later. Nearly doubling the price of
unauthorized shipments will do one
of two things for FedEx: dissuade
customers from clogging their supply
Second2015fuelhikeheadlines
rateincreaseannouncement
[1] /// transportationimpact.com

2. sorial charges, are what keep
shippers guessing. The net
impact customers feel when-
ever they turn the calendar
typically is more significant
than the 4- to 6-percent aver-
age price hikes.
3-year plan
Companies that continue to
trade down from premium
services, for instance, will
continue to experience dis-
proportionate increases, since
those services will receive
the largest price hikes in
2016, nearly 8 percent across
all zones for all packages
weighing between 1 and 30
pounds. This trend started
when FedEx laid out a 3-year
plan to generate $1.7 billion
in “profitability improvement”
in October 2012.
Targeted for the bulk of that
improvement, FedEx said at
the time, was its Express seg-
ment, which was still feeling
the effect of a lagging eco-
nomic recovery and, ironically,
higher prices for jet fuel.
Back then, the Zone 2,
1-pound minimum for a FedEx
Home Delivery package was
$5.49, plus a residential sur-
charge of $2.55, which netted
a published rate of $8.04.
Next year that same package
will cost 26.7 percent more,
with a base rate of $6.94
and residential surcharge of
$3.25, resulting in a net rate
of $10.19.
Fuel surcharge for FedEx Ground will increase 0.75% to 1%,
effective 11/2/2015, depending on price of diesel fuel.
ATLEAST BUTLESSTHAN SURCHARGE
$2.11 $2.29 2.50%
$2.29 $2.47 3.00%
$2.47 $2.65 3.50%
$2.65 $2.83 4.00%
$2.83 $3.01 4.50%
$3.01 $3.19 5.00%
$3.19 $3.37 5.50%
$3.37 $3.55 6.00%
$3.55 $3.73 6.50%
$3.73 $3.91 7.00%
$3.91 $4.09 7.50%
$4.09 $4.27 8.00%
2015 FedEx®
Ground
FUELSURCHARGETABLE
(EFFECTIVEFEB.2,2015)
ATLEAST BUTLESSTHAN SURCHARGE %CHANGE
$2.20 $2.29 3.50% 1.00%
$2.29 $2.38 3.75% 0.75%
$2.38 $2.47 4.00% 1.00%
$2.47 $2.56 4.25% 0.75%
$2.56 $2.65 4.50% 1.00%
$2.65 $2.74 4.75% 0.75%
$2.74 $2.83 5.00% 1.00%
$2.83 $2.92 5.25% 0.75%
$2.92 $3.01 5.50% 1.00%
$3.01 $3.10 5.75% 0.75%
2015 FedEx®
Ground
FUELSURCHARGETABLE
(EFFECTIVENOV.2,2015)
This year’s trend of FedEx’s
perceived angst about
unpredictable e-commerce
and oversize shippers also is
evident in the service-level
discount matrices published
in conjunction with the an-
nouncement.
Keep shippers guessing
While shippers expect prices
to increase annually, the
details of the individual
service-level increases that
FedEx bakes into its annual
published average, in addition
to the increases in its acces-
chains with big, awkward
packages, or pay the carrier
handsomely for the effort of
moving those packages from
A to B. Fuel hikes should pro-
vide top-line revenue relief,
which is desperately needed
to rally support from inves-
tors, when Q2 2016 earnings
are announced on December
17. As of September 25, FedEx
shares were down nearly 17
percent on the year, putting
the stock on pace to post its
first calendar-year loss since
2011. It is up 70 percent since
that time.
Without minimum relief, the discounts most
high-volume shippers enjoy lose value with
every increase added to the base rate.
[2] /// transportationimpact.com

3. SERVICE FEDEXFIRST
OVERNIGHT
FEDEXPRIORITY
OVERNIGHT
FEDEXSTANDARD
OVERNIGHT
FEDEX2DAY
A.M.
FEDEX
2DAY
FEDEXEXPRESS
SAVER
FEDEX
GROUND
RESIDENTIAL
SURCHARGE
FEDEXHOME
DELIVERY
2012 $48.40 $22.40 $18.80 $13.92 $12.10 $11.35 $5.49 $2.55 $8.04
2016 $54.09 $26.09 $23.83 $18.04 $15.69 $14.83 $6.94 $3.25 $10.19
$Change $5.69 $3.69 $5.03 $4.12 $3.59 $3.48 $1.45 $0.70 $2.15
%Change 11.8% 16.5% 26.8% 29.6% 29.7% 30.7% 26.4% 27.5% 26.7%
5-Year Cumulating Avg. Rate Change
FedEx has continued to raise prices on non-premium services
disproportionate to premium services over the past five years.
Fuel surcharge for FedEx Express will increase 1.5% to
1.75%, effective 11/2/15, depending on price of jet fuel.
ATLEAST BUTLESSTHAN SURCHARGE
$1.27 $1.35 0.50%
$1.35 $1.43 1.00%
$1.43 $1.51 1.50%
$1.51 $1.59 2.00%
$1.59 $1.67 2.50%
$1.67 $1.75 3.00%
2015 FedEx®
Express
FUELSURCHARGETABLE
(EFFECTIVEFEB.2,2015)
ATLEAST BUTLESSTHAN SURCHARGE %CHANGE
$1.19 $1.23 1.50% 1.50%
$1.23 $1.27 1.75% 1.75%
$1.27 $1.31 2.00% 1.50%
$1.31 $1.35 2.25% 1.75%
$1.35 $1.39 2.50% 1.50%
$1.39 $1.43 2.75% 1.75%
$1.43 $1.47 3.00% 1.50%
$1.47 $1.51 3.25% 1.75%
$1.51 $1.55 3.50% 1.50%
$1.55 $1.59 3.75% 1.75%
$1.59 $1.63 4.00% 1.50%
$1.63 $1.67 4.25% 1.75%
$1.67 $1.71 4.50% 1.50%
$1.71 $1.75 4.75% 1.75%
2015 FedEx®
Express
FUELSURCHARGETABLE
(EFFECTIVENOV.2,2015)
By comparison, the net
rate for that same package
shipped FedEx First Overnight,
one of the carrier’s more pre-
mium services, has increased
only 11.8 percent.
To make matters worse,
without minimum relief, the
discounts most high-volume
shippers enjoy lose value with
every increase added to the
base rate. Each time that rate
rises, the price floor eats away
the net discount received by
the customer. The result for
the shipper is costs that are
higher still, and fluffy margins
for the carrier.
Trading down costs
Of course, weights and zones
vary widely, and any combi-
nation of the two could yield
vastly different results. Ship-
ments that carry higher base
costs will not be impacted by
minimums, and depending
on individual discount levels,
there likely exist opportuni-
ties for customers to operate
cost-effectively within a lane
that makes sense. Finding that
balance, though, is not easy,
and it is clear from the latest
round of price hikes that
FedEx will continue to make
sure trading down comes at
a cost.
[3] /// transportationimpact.com