FedEx, in online pivot, backs away from holiday surcharges

FedEx will skip special charges for most packages shipped during the holiday season this year as it seeks to undercut rival UPS in a fight for a larger share of the millions of items now bought online.

FedEx Corp said on Thursday that it won't charge extra for peak-season residential deliveries unless the package requires extra handling, such as for very large items.

On an average day, FedEx delivers more than 12 million packages to businesses and homes, but that can jump to 25 million on peak days in December.

Residential shipments represent a much smaller share of the company's revenue, but they are growing faster because of the rise of online shopping. Residential deliveries are relatively inefficient because homes are so spread out and a driver might take one package to a house instead of several to a business that raises costs for FedEx.

The shipper, based in Memphis, Tennessee, said that from November 20 through December 24 it will add surcharges of US$3 for packages needing special handling, US$25 for oversized items, and US$300 for unauthorised shipments.

FedEx's announcement comes two months after UPS announced new surcharges that will impact shipments in some weeks near Black Friday and Christmas.

United Parcel Service Inc said that it would add 27 cents for residential deliveries from November 19 to December 2 and December 17-23. It will add a fee of between 81 and 97 cents to overnight, second- or third-day deliveries for residential consignments December 17-23. There are other charges for oversized packages.

In addition, UPS will charge a peak surcharge on some international air-shipping routes.

UPS, based in Atlanta, did not immediately comment on the manoeuvre by FedEx. In an interview last week, UPS CEO David Abney said his company used the surcharges to encourage big shippers to adjust some promotions and shipments to help UPS smooth out its holiday-season volumes.

In afternoon trading, FedEx shares fell 27 cents to US$209.23, and UPS shares added 25 cents to US$111.51.

- AP