In a recent notice, FedEx stated the following:

"The impact of COVID-19 is causing local, state, and national governments around the world to issue work and travel restrictions on a daily basis which are impacting our ability to meet our high standards of service. As a result, we have made the decision to suspend our money-back guarantee for all FedEx Express, FedEx Ground, FedEx Freight and FedEx Office services effective immediately until further notice. Because FedEx is an essential transportation service provider, we will continue operating as government restrictions and regulations allow."

PARCEL spoke with Rob Martinez, founder & co-CEO of Shipware, to get his thoughts on the matter. They are as follows:

Not surprised by the news that FedEx and UPS would temporarily suspend money-back-guarantees for on-time service performance. Shipware actually anticipated it: with so many businesses closed due to shelter in place, it makes sense that the carriers shouldn’t be held to on-time service performance during COVID.

Shippers should continue to audit parcels for other refunds including rating errors, erroneous charges, duplicate charges, labels manifested by not shipped, incorrect shipping charge corrections, etc.

In addition to the suspension of service guarantees, shippers might also anticipate a “COVID surcharge” as DHL has imposed this fee along with a number of trucking companies. Categorically, it’s costing the carriers more to service companies during COVID with added costs associated with planning, safety precautions, undeliverable packages, re-diverted deliveries, etc. The surcharge will help the carriers maintain high delivery standards and recover some of the added costs.

Shippers with cash flow constraints will be subject to UPS late fees, and should proactively work with their UPS account executives to extend payment terms or other such arrangements.

As parcel volumes have dropped precipitously for many shippers, diminished volumes are likely to adversely impact discounts (missed revenue bands) and rebates. Shippers are wise to monitor rolling averages to anticipate the loss of discounts associated with dropping to lower revenue bands and earned discount thresholds. For many shippers suffering from volume declines, higher costs from poorer discounts at lower revenue bands will come when they can least afford it. Here’s a Shipware article entitled Parcel Shipping in a Pandemic that addresses this concern, and provide several contract strategies to mitigate the loss of rebates and discounts..

Shipware has developed a webpage to provide COVID related information about operational disruption, new surcharges, service guarantee suspensions and other important parcel & LTL updates.