For those shippers that use FedEx SmartPost, be prepared that effective July 15th, FedEx will be adding a delivery area surcharge of $0.25 per package, which will apply to FedEx SmartPost shipments destined to select U.S. ZIP codes.
The impact of this change to your bottom line will depend on your shipment profile, with the following being the primary factors:
• What % of volume that FedEx SmartPost contributes
• What % of the volume that is sent to “remote locations”
• The zone distribution *
• The size and/or weight of the shipments *
* Although the $0.25 applies equally, it will account for a higher % of the overall spend the lower the weight and the nearer the zone distribution (minimum charges playing a factor)
We were unable to verify or locate a press release that UPS SurePost or Mail Innovations shipments would experience similar increases, but a new Delivery Area Surcharge message appears on the status bar in the Shipping window and on the Misc. tab in the Shipment History window in UPS WorldShip, so if UPS hasn’t already, it’s likely that it’s close behind.
Considering that the large majority of shipments are inducted at the DDU, which is the local post office that handles the final delivery to the residence, the basis for this accessorial charge is arguably inappropriate. One can make the case that the issue with a remote area is typically related to traveling further distances between stops, so since the USPS is making the final delivery, FedEx will maintain high delivery density of these shipments to the DDU.
Although Residential Surcharges continue to be “waived”, we can likely expect to see the Delivery Area Surcharge to continue to increase going forth. With more than 2 million FedEx SmartPost shipments being sent on a daily basis and at least 20% of those likely qualifying for this fee, it’s a non-intrusive way to add more than $100K in revenue per active shipping day, which will lead to approximately $25 million in annual revenue. For those of us that use the SmartPost service, we’ll make our contribution.
Thomas Andersen, MBA is head of parcel cost management services for AFS. AFS specializes in reducing shipping costs through freight and parcel auditing, carrier contract optimization and advanced shipping analytics. Please feel free to contact him at tandersen@afs.net.
The impact of this change to your bottom line will depend on your shipment profile, with the following being the primary factors:
• What % of volume that FedEx SmartPost contributes
• What % of the volume that is sent to “remote locations”
• The zone distribution *
• The size and/or weight of the shipments *
* Although the $0.25 applies equally, it will account for a higher % of the overall spend the lower the weight and the nearer the zone distribution (minimum charges playing a factor)
We were unable to verify or locate a press release that UPS SurePost or Mail Innovations shipments would experience similar increases, but a new Delivery Area Surcharge message appears on the status bar in the Shipping window and on the Misc. tab in the Shipment History window in UPS WorldShip, so if UPS hasn’t already, it’s likely that it’s close behind.
Considering that the large majority of shipments are inducted at the DDU, which is the local post office that handles the final delivery to the residence, the basis for this accessorial charge is arguably inappropriate. One can make the case that the issue with a remote area is typically related to traveling further distances between stops, so since the USPS is making the final delivery, FedEx will maintain high delivery density of these shipments to the DDU.
Although Residential Surcharges continue to be “waived”, we can likely expect to see the Delivery Area Surcharge to continue to increase going forth. With more than 2 million FedEx SmartPost shipments being sent on a daily basis and at least 20% of those likely qualifying for this fee, it’s a non-intrusive way to add more than $100K in revenue per active shipping day, which will lead to approximately $25 million in annual revenue. For those of us that use the SmartPost service, we’ll make our contribution.
Thomas Andersen, MBA is head of parcel cost management services for AFS. AFS specializes in reducing shipping costs through freight and parcel auditing, carrier contract optimization and advanced shipping analytics. Please feel free to contact him at tandersen@afs.net.
