Executive Briefings

FedEx to Skip Holiday Surcharges for Most Orders

FedEx Corp. said it won't charge additional fees for most orders during the holiday season, in contrast with United Parcel Service Inc., undercutting its main rival as they battle for e-commerce customers.

The decision by FedEx, announced last week, is a gamble that it can cover the extra costs during a period when daily volume can double to more than 26 million packages. It will charge extra fees for deliveries requiring additional handling, which include larger and irregularly shaped packages, as well as oversize packages, which now make up 10 percent of its ground-shipping volume.

UPS has set considerably different pricing for the holiday season. In June it said it would charge extra for most packages delivered to homes around Black Friday and Christmas. While the per-package fee ranges from 27 cents to 97 cents, analysts estimate that UPS could generate tens of millions in revenue from the fees.

Patrick Fitzgerald, a FedEx senior communications and marketing executive, said the decision wasn’t a competitive response to UPS. “This is really about ensuring that we price effectively,” he said in an interview.

UPS declined to comment on FedEx’s move but defended its strategy.

“UPS’s peak-season pricing positions the company to be appropriately compensated for the high value we provide at a time when the company must double daily delivery volume for six-to-seven consecutive weeks to meet customer demands,” it said in a statement.

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The decision by FedEx, announced last week, is a gamble that it can cover the extra costs during a period when daily volume can double to more than 26 million packages. It will charge extra fees for deliveries requiring additional handling, which include larger and irregularly shaped packages, as well as oversize packages, which now make up 10 percent of its ground-shipping volume.

UPS has set considerably different pricing for the holiday season. In June it said it would charge extra for most packages delivered to homes around Black Friday and Christmas. While the per-package fee ranges from 27 cents to 97 cents, analysts estimate that UPS could generate tens of millions in revenue from the fees.

Patrick Fitzgerald, a FedEx senior communications and marketing executive, said the decision wasn’t a competitive response to UPS. “This is really about ensuring that we price effectively,” he said in an interview.

UPS declined to comment on FedEx’s move but defended its strategy.

“UPS’s peak-season pricing positions the company to be appropriately compensated for the high value we provide at a time when the company must double daily delivery volume for six-to-seven consecutive weeks to meet customer demands,” it said in a statement.

Read Full Article