FedEx 2023 General Rate Increases — Impact on Furniture Companies

This arti­cle is focused on the 2023 FedEx Gen­er­al Rate Increas­es as they impact fur­ni­ture com­pa­nies (par­tic­u­lar­ly eCom­merce fur­ni­ture companies).

In the com­ing weeks, we are going to high­light a num­ber of indus­tries and con­sid­er the impact that the rate increas­es will have on their packages.

Furniture Company (Common) Profile

• Pack­ages are often large and heavy
• Many mid­sized fur­ni­ture com­pa­nies ship out of just one or two locations
• Car­ri­ers gen­er­al­ly use ground and home deliv­ery ser­vices (FedEx Ground econ­o­my is rarely a good option because of weight)
• Deliv­er­ies are often to res­i­den­tial locations
• They may ship direct or drop ship (3^rd party)
• May ship high­er vol­ume dur­ing holidays

Furniture Company Profile (from a billing perspective)

• High aver­age pack­age weight (often 30+ LB’s)
• Deliv­er­ies across all zones
• Use of ground and home deliv­ery ser­vices primarily
• Com­mon sur­charges may include fuel, res­i­den­tial deliv­ery, addi­tion­al han­dling sur­charge, over­size charge, ground unau­tho­rized pack­age charge and deliv­ery area sur­charges includ­ing stan­dard, extend­ed and the new remote sur­charge and third-par­ty billing surcharge

FedEx 2023 General Rate Increases — High-Impact Areas for Furniture Companies

• FedEx Ground increas­es are high­est for Zones 6–8. For most ship­ments in the 25–50 pound range, the increase is 8.5%.
• FedEx Ground Zones 2–5 range are most­ly in the 5.5%-6.5% range for ship­ments 25 LB’s+
• All addi­tion­al han­dling (AHS) went up by 10%+
  • AHS dimen­sions — 15%-17.5%
  • AHS weight – 13%-15%
  • AHS Pack­ag­ing – 16%-19%
• Over­size — 17%-23%
• Res­i­den­tial – 5%-10%
• DAS – 4%-10% — Note that there is a new “Remote” sur­charge of $13.25 which rep­re­sents a sub­stan­tial increase above any pre­vi­ous sur­charges (it is more than dou­ble the extend­ed res­i­den­tial sur­charge), and FedEx has his­tor­i­cal­ly adjust­ed zip codes to increase the per­cent­age of ship­ments which are impact­ed by Deliv­ery area sur­charges, so increas­es will like­ly be towards the high­er end of the range
• Peak Sur­charge – FedEx expand­ed the peak sur­charge sea­son by a month. Peak sur­charges dis­pro­por­tion­ate­ly impact fur­ni­ture com­pa­nies since AHS, Over­size and Ground Unau­tho­rized have a peak charge.  For more info on peak charges, please see our arti­cle. Infor­ma­tion can also be found on the FedEx web­site.

Tak­en in aggre­gate, it is rea­son­able to expect your actu­al rates to increase by rough­ly 10% as line­haul will be slight­ly below 10%, while sur­charges are almost all above 10%.  The extend­ed peak sea­son can have a sub­stan­tial impact. The impact will be most severe for com­pa­nies who are often assessed over­size charges.

Look­ing for­ward to 2023, maybe the biggest unknown is fuel.  Fuel increas­es drove up costs in 2022 by rough­ly 10%, and it remains to be seen whether fuel prices will remain steady, if they will increase or decrease.  A swing of 5% in either direc­tion is like­ly worth con­sid­er­ing when fore­cast­ing costs, and com­pa­nies who are look­ing to be cau­tious may want to mod­el larg­er swings

The analy­sis here is a gen­er­al­ized analy­sis designed to pro­vide insight for a par­tic­u­lar pack­age pro­file.  For a free analy­sis on how the 2023 rate increas­es on your com­pa­ny, please email analysis@shiplion.com or fill out the form on our website.