After UPS raised a ruckus by suspending package pickups during the holiday peak season, FedEx Corp. is creating its own stir in a logistics sector scrambling to keep up with surging demand for items purchased online.
FedEx said the impact of the coronavirus continues to generate elevated volumes and the company continues to experience high demand for capacity and increased operating costs across its network.
To continue providing customers with the best possible service during this challenging time, FedEx said customers at the enterprise level that meet a certain volume threshold will be charged a “Peak Residential Delivery Charge” for packages shipped starting Feb. 15 until further notice.
The charge amount of 30 cents per package will apply to FedEx Express and FedEx Ground U.S. domestic residential packages, excluding FedEx SmartPost and FedEx One Rate packages. FedEx SmartPost packages will be subject to the previously announced Peak Surcharge of 75 cents per package effective Jan. 18.
The scope of a customer’s volume will be determined by FedEx. The Peak Residential Delivery Charge will be assessed in addition to the customer’s Residential Delivery Charge. Any contracted discount or cap the customer may have on the Residential Delivery Charge will not apply to the Peak Residential Delivery Charge.
For customers who ship more than 30,000 weekly average packages combined for FedEx Express and FedEx Ground U.S. domestic residential packages and FedEx SmartPost packages from Jan. 4 to Jan. 31, the Peak Residential Delivery Charge will apply.
In the second quarter ended Nov. 30, FedEx reported that operating results increased due to volume growth in FedEx International Priority and U.S. domestic residential package services and pricing initiatives across all transportation segments. These factors were partially offset by costs to support strong demand and to expand services, variable compensation expense, and COVID-19-related costs.
Income more than doubled in the period to $1.23 billion from $560 million. Revenue rose 19.1 percent to $20.6 billion.
“These results demonstrate the unparalleled strength of our global express network, the breadth of our e-commerce capabilities and the dedication of our people,” Frederick W. Smith, FedEx Corp. chairman and CEO, said last month in reporting the results.