Package delivery service FedEx Corp. (NYSE: FDX) announced Thursday that it will not charge most residential holiday season surcharge fees this year. The company will continue to charge fees during the period for oversized packages and those requiring special handling.
FedEx did not specify precisely which surcharges would be overlooked from November 20 through December 24, but rival United Parcel Service Inc. (NYSE: UPS) announced in June that it would charge fees of $0.27 on all ground packages delivered between Black Friday and December 2 and the week before December 23. Next-day air packages will cost an extra $0.81 in the week between December 17 and 23, and two- or three-day delivery will cost an additional $0.97 per package.
While this may not be a big deal to the average consumer who mails a modest number of packages during the holiday period, it is a big deal to e-commerce sellers like Amazon.com Inc. (NASDAQ: AMZN) and Wal-Mart Stores Inc. (NYSE: WMT), and its wholly owned subsidiary Jetc.com. Residential delivery fees also weigh on small e-commerce retailers who work on already-thin margins in order to compete against the big dogs.
FedEx officials denied any relationship between the company’s decision to forego residential delivery fees and the fees already announced by UPS. A FedEx executive told The Wall Street Journal that the decision was not a response to UPS’s pricing but, rather “about ensuring that we price effectively.” The clear implication is that FedEx can handle the expected holiday surge while UPS is hedging its bets by charging fees that might dissuade some shippers.
To offset some of the financial pain, FedEx is raising its holiday charges on certain types of packages. From November 20 through December 24, FedEx Express and FedEx Ground in the United States and Canada will increase the surcharge for additional handling by $3 per package to $14, for oversize goods by $25 per package to $97.50, and for unauthorized shipments by $300 per package to $415. An unauthorized package is one that is more than 108 inches in length or more than 165 inches in length and girth combined or heavier than 150 pounds. FedEx uses its own discretion to determine whether to accept and deliver unauthorized packages.
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