UPDATE 2-FedEx will not charge extra for most holiday home deliveries
(Adds details on UPS surcharges, paragraphs 4-5; UPS comment in
By Eric M. JohnsonAug 3 (Reuters) - FedEx Corp <FDX.N> said on Thursday it
will not charge customers extra fees for most packages delivered
to homes during the peak holiday shopping season this year,
challenging rival United Parcel Service, which plans more
widespread peak-season surcharges.
FedEx's holiday pricing strategy steps up the Memphis-based
company's battle with UPS, the world's largest package delivery
company, for a greater share of e-commerce business driven by
retailers like Amazon.com Inc <AMZN.O> and Wal-Mart Stores Inc
UPS and FedEx have spent billions of dollars on upgrading
their networks to handle rapidly rising e-commerce package
volumes, particularly in the weeks leading up to Christmas.
Atlanta-based UPS has charted a different course for pricing
this holiday season. Parcels delivered to residences, as well as
large packages and those exceeding system weight limits, would
face surcharges of up to 97 cents for two-day air services to
residential addresses from Dec. 17-23, UPS said.
A 27-cent surcharge per package will apply to UPS' ground
service from Nov. 19 to Dec. 2 and between Dec. 17 and Dec. 23,
UPS declined to comment on FedEx's surcharges, but said its
own peak-season pricing makes sure its "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."
Baird Equity Research analyst Colin Sebastian said usually
large shippers such as Amazon negotiate their own rates, so the
impact from this would likely be limited.
A spokeswoman for Amazon did not immediately return a
request for comment.
FedEx and UPS shares dipped slightly in trading on Thursday.
FedEx Express and FedEx Ground in the U.S. and Canada will
increase holiday surcharges for additional handling by $3 per
package and for oversized goods by $25. FedEx will charge an
extra $300 for parcels that exceed its maximum weight limit.
FedEx said the new surcharges on oversize packages hit
roughly 10 percent of its ground-shipping volume during the
holiday rush and will be in place the week leading up to Black
Friday through Christmas Eve.
Amit Mehrotra, an analyst at Deutsche Bank in New York, said
UPS and FedEx "aren't that far off from each other."
"FedEx will not be matching UPS as far as a blanket
surcharge, but it is taking equal steps to manage its higher
costs associated with oversized or extraordinary packages,
things that are huge to push through their facilities."
(Reporting by Eric M. Johnson in Seattle, Jeffrey Dastin in San
Francisco, and Rachit Vats in Bengaluru; Editing by Sai Sachin
Ravikumar, Shounak Dasgupta and Bernard Orr)
((Rachit.Vats@thomsonreuters.com; within U.S. +1 646 223 8780,
outside U.S. +91 80 6749 3798; Reuters Messaging:
Keywords: FEDEX SURCHARGE/ (UPDATE 2, PIX)