It’s that time of the year when FedEx and UPS announce the new rates for the subsequent year. If you are an e-commerce business already bogged down by the prevailing uncertainty and chaos, you better brace yourselves. The FedEx general rate increase for 2021 is shockingly identical to that of the previous year. There has been an overall increase of 4.9% across services and surcharges for 2021.
Ofcourse a stark difference is that there is no hint of resuming the FedEx money-back guarantee. So as eCommerce business owners, you will be paying a steeper price for premium services with zero accountability. When you foot your bill for FedEx overnight shipment, cling on tight to the last strand of hope. If you are lucky, the package may not be shipped through cheaper service types. FedEx might just deliver the shipment on-time. Fingers crossed!
Now that we have stated the obvious, let us analyze the FedEx rate increase in detail:
Economic shipping on shaky grounds
FedEx Ground and FedEx SmartPost are expected to be pricier in 2021. On average FedEx ground and FedEx, home delivery packages head up by 4.9%. The 2021 GRI is targetted at e-commerce businesses that ship lower weight shipments. With the recent surge in the B2C shipment volume, FedEx’s emphasis on the new GRI has been directed towards the monetization of these avenues. The shipping cost of FedEx packages weighing 1-5lb has increased by 6%.
Larger Packages take a bigger hit
As with previous years, the trend with penalizing larger packages continues. Additional handling charges will be levied on packages with a dimension of 105”. There is also an increase in residential surcharges by 8.75%.z
If you are looking to compete with Amazon…
You may have to reconsider. FedEx 2 day, FedEx 2 day AM, and FedEx Express saver shipments will see a hike of more than 5% effective from January 18, 2021. Though the percentage increase for standard overnight and priority overnight is in line with the 4.9% increase.
More zones slated for delivery area surcharge
According to new GRI, more zip codes will be charged delivery area surcharge. Moreover, the delivery area surcharge itself will head up by 9.2% compared to 2020. The highlight of FedEx GRI 2021 is the introduction of a late fee of 6%. The standard is a 15 day period for businesses to clear outstanding payments. Shippers must negotiate a reasonable payment window beforehand to avoid unnecessary charges.
Although FedEx GRI 2021 is predictable, businesses must realize that they are incurring a larger expense by letting go of their rights to hold FedEx or UPS accountable for their delivery commitment. With no change in the money-back guarantee suspension, eCommerce businesses need to figure out alternate ways to keep their customers happy. At this junction, investing in technology such as real-time order tracking and predictive delivery analytics can be beneficial.