SUPPLYCHAINSUCCESS
FEDEX 2018 GRI AND THE CHANGES TO COME By Sam Simpson
O
n September 18, FedEx announced its 2018 general rate increase (GRI). FedEx’s 2018 GRI is keeping the US Domestic Express and Ground increase to 4.9% (as compared to 2017 GRI Express at 3.9%). The FedEx GRI will take effect on January 1, 2018, but FedEx also added another significant rating change that will occur 21 days later. On January 22, 2018, FedEx will start dimensional weighting for SmartPost and will start charging third-party billing fees for all service levels. THE RATES Since these GRIs are described by the carriers as an average net, the actual impact to certain service level rates can vary greatly.
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FedEx announced a 4.9% average increase for its Express and Ground services. While the average increase for FedEx is 4.9%, it is very important to consider how these averages are calculated and which services will take the greatest increase. Express Saver is an excellent example of this average and the variances that can take place. Express Saver Zones 6 through 8 took a 7.4% increase, while the lower zones took an average of 3.9% increase.
The FedEx increase is broken out by service level and weight breaks in Table 2 to give you a better idea where the largest increases will take place. On average, Ground and Priority Overnight will take slightly less than the announced increases at 4.5% and 4.7% respectively, while 2 Day AM and Express Saver are taking the greatest increases at 6.3% and 6.1% overall. ADDITIONAL CHARGES FedEx will be implementing changes to its accessorial surcharges, adding a third-party billing surcharge, and starting dimensional weighting for SmartPost. These changes
will mean a greater cost for shippers and a need for deeper analysis, depending on which services and surcharges a shipper uses the most. The majority of the surcharge increases will go into effect on January 1, whereas the third-party billing surcharge and the SmartPost dimensional weighting will start on January 22. The major surcharge changes for Ground and Express are listed in Table 3. Most of the increases are between 2.6% and 10.3%. The major callout here is the 160% increase for the Unauthorized/LPS Surcharge, which will be $300 in 2018. FedEx does not have an interest in shipping overly large packages, and the 160% is there to deter shippers of
large packages from exceeding the overmax threshold. The 2.5% third-party billing surcharge for all service levels will be an increase that will impact all shippers using third-party services. Since this 2.5% is applied to total charges, this will make the cost of the GRI much more than the average 4.9% as well as add to the surcharge increases. Total charges are defined as “transportation charges, surcharges, and additional fees but do not include duties, taxes, and ancillary clearance service fees” by FedEx. FedEx will be implementing dimensional weighting for SmartPost. The Service Guide