FedEx Won’t Add Surcharge to Most Home Deliveries During Gift-Giving Season

Luke Sharrett/Bloomberg News

FedEx Corp. is approaching this year’s holiday shipping surge in a different way than its rival, UPS Inc., as the Memphis, Tenn.-based carrier said it will not impose a surcharge on most residential deliveries.

The company said Aug. 3 there will be no surcharge for regular packages, although there will be an exception for oversize and unauthorized packages, plus those requiring extra care.

FedEx and Atlanta-based UPS are active in the e-commerce boom, in which consumers buy goods online and take delivery by parcel companies rather than trips to stores. UPS said June 19 it would impose a residential surcharge of 27 cents to 97 cents per package for certain days in November and December.

“To support our millions of loyal small business customers and consumers shipping holiday gifts at FedEx Office and FedEx Onsite locations, FedEx will not apply holiday season surcharges except for packages that are oversized, unauthorized or require additional handling,” Senior Vice President Patrick Fitzgerald said in the company statement.

“These packages consume an inordinate amount of cubic space in FedEx Ground and FedEx Express equipment in the U.S. and Canada,” he added.

At the time of the UPS announcement, FedEx executives said they were considering what to do but had not made a decision.

Both companies are especially active in November and December during the gift-giving season.

UPS ranks No. 1 and FedEx is No. 2 on the Transport Topics Top 100 list of the largest North American for-hire carriers.

Stock analyst Benjamin Hartford told clients of Robert W. Baird & Co. that the decision is a “net positive” for FedEx.

“Unlike with UPS, which also implemented a residential surcharge during certain weeks between late November and late December, FedEx did not extend its program to cover residential deliveries,” Hartford said shortly after the FedEx announcement. “The lack of a residential delivery surcharge could create [market] share gain opportunities for FedEx, which believes the residential delivery component during the holiday shipping season does not present the challenges to its network that the irregularly sized packages do.”

In the same statement, FedEx used the opportunity to renew its campaign for longer twin pup trailers.

The company urged “Congress to adopt a nationwide standard of twin trailers at 33 feet versus 28 feet. This would increase package capacity per trip, increase safety on the highways and use less fuel.”

FedEx said 33-foot twins are permitted in just 20 states and that the company advocates for a nationwide standard of 33 feet, but with no increase in total weight.