FedEx Releases Peak "Demand" Surcharges For 2023 Holiday Season
FedEx has released an update to their Peak surcharges, rebranding them as "Demand" surcharges, in preparation for holiday season shipping.
The added fees, which will be active between October and January, apply to large, bulky packages or those that require additional handling. FedEx will also add surcharges for FedEx Ground Economy services and for high-volume customers that ship more during peak season.
Demand surcharges
Effective Sept. 4, 2023, any reference to "peak" in a surcharge name will be replaced with and rebranded as "demand."During times of elevated volumes, high demand for capacity, and increased operating costs across our network, FedEx will implement Demand surcharges. Demand surcharges are determined for each market based on regular assessments of shipment volume and capacity within our network to accommodate.
Demand surcharges for domestic U.S. services
Updated Aug. 29, 2023: Express and Ground Demand Surcharges
As FedEx prepares for high demand during the holiday shipping season, we are adjusting our networks to best deliver for our customers. We again anticipate the surge in residential volume to carry over into the new year.To continue providing our customers with the best possible service, we are implementing the following demand surcharges and fees.
FedEx gave further information about how the Demand Residential Delivery Charge will be calculated:
Demand — Residential Delivery Charge
Demand — Residential Delivery Charge will adjust dynamically each week. During each calculation week (defined below), customer’s shipping volume and peaking factor will be calculated based on the formula set forth below to determine the surcharge amount applied for the corresponding application week (defined below). A two-week lag will apply between the shipping activity calculation and the surcharge application. See the table below for all calculation weeks and application weeks.
Additional Demand Residential Delivery Charge information:
“Calculation week” is the week during which customer’s shipping volume is calculated. “Application week” is the week during which the surcharge is applied based on the corresponding calculation week.
For customers at the enterprise level who ship more than 20,000 residential* and FedEx Ground Economy packages (total for FedEx Express and FedEx Ground U.S. domestic) during a calculation week, the Demand — Residential Delivery Charge will apply for the corresponding application week. The Demand – Residential Delivery Charge will be assessed in addition to the Residential Delivery Charge and any contracted discount or cap the customer may have on the Residential Delivery Charge will not apply to the Demand – Residential Delivery Charge.
The amount charged per package during the application week will be based on a peaking factor, reflected as a percentage increase in the chart below, which is determined by dividing the residential* and FedEx Ground Economy packages shipped during the corresponding calculation week by the weekly average residential* and FedEx Ground Economy packages shipped June 5, 2023-July 2, 2023, and then multiplying by 100. Peaking factor and amount charged are determined separately for FedEx Express and FedEx Ground.
For purposes of calculating weekly volume during any calculation week that contains a holiday, weekly package volume will be adjusted to account for the one fewer operating day by multiplying the volume tendered during the week by 5 and then dividing by 4. For example, if a customer’s weekly volume tendered is 10,000 packages, simply multiply 10,000 by 5, then divide that number by 4 to calculate the weekly volume during a calculation week.
*Excludes FedEx One Rate packages
How will these peak surcharges impact your business during the critical Q4 holiday season? Let us know in the comments below!
