May 2 FedEx Corp, the world's second
largest parcel delivery company, said FedEx Freight would raise
fuel surcharge by 3 percent next month, aiming to offset an
increase in costs from rising fuel prices.
The company also said FedEx Ground would start applying
dimensional weight pricing to all shipments from January next
year. Dimensional weight pricing is currently applied only to
packages measuring three cubic feet or greater.
"They are raising their fuel recovery. It will increase the
cost to shippers," said David Vernon, an analyst at Sanford
The move comes after FedEx reported a lower-than-expected
quarterly profit and cut its full-year forecast in March due to
higher costs related to rising fuel prices and the winter storms
in the United States.
Fuel costs at FedEx Freight rose 3 percent in the third
quarter ended Feb. 28. The business contributed about 12 percent
to the company's total revenue in the quarter.
Both FedEx and larger rival UPS raised shipping
rates for their freight units in March.
Freight is a more competitive than the ground and express
businesses, where FedEx and UPS are the only two big players.
The FedEx Freight business includes FedEx Freight Canada,
FedEx Custom Critical and FedEx Freight, which is a provider of
less-than-truckload freight services.
Less-than-truckload is the shipping of relatively small
loads of freight, and customers use this method because it costs
less than hiring an entire truck for an exclusive shipment.
FedEx Ground ships small packages throughout the United
States and Canada and also delivers low-weight packages through
a partnership with the U.S. Postal Service.
(Reporting by Sweta Singh and Ankit Ajmera; Editing by Savio