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FedEx 2020 Q3 Earnings Call Recap

By Shipware | FedEx, News

If there’s one thing to take away from FedEx’s Q3 earnings call on March 17, 2020, it’s that FedEx’s margins will increase – on top of consistently raising rates annually.

Although the carrier suspended its 2020 profit outlook due to uncertainly cast by the coronavirus pandemic, by which they’ve been significantly impacted by declining volumes, they reported revenue earnings of $17.5 billion, roughly a 3% increase, topping consensus estimates. FedEx has only bettered estimates once in the past four quarters.

A number of investments made that, going forward, will increase FedEx’s margins by lowering the cost to service as they increase rates year-over-year. Investments have been made into ground network optimization – optimizing delivery density and buying smaller sort facilities closer to destinations – and FedEx Ground will deliver some SmartPost and day-definite Express packages. These initiatives, in conjunction with the e-commerce boom of late, give reason for FedEx to state their expectation for continued FedEx Ground revenue growth in Q4.

Alan Graf, FedEx EVP and CFO on the effect of the Coronavirus pandemic and operating costs: “To mitigate these near-term headwinds and position the company for future earnings growth, we are attacking costs throughout the company by managing capacity, retiring our oldest and least-efficient aircraft, integrating TNT Express, and lowering our residential delivery costs by having FedEx Ground deliver FedEx SmartPost and certain day-definite FedEx Express packages.” 

The increased use of Ground might be boon to some shippers, in regard to Home Delivery speed, as FedEx stated their net speed advantage for these shipments increases over the course of the week – 20% faster than UPS Ground on Monday and 80% faster on Sunday. Home Delivery and Ground are, reportedly, at least one day faster than UPS Ground in 320 million ZIP pairs and cheaper in the residential final mile that the USPS further increasing profit margins. FedEx’s increased margins as a result of lower costs-to-serve come to no pricing advantages to shippers who don’t renegotiate their contracts with a comprehensive understanding of FedEx’s pricing model. 

Furthermore, if faster Ground delivery is appealing to your business – whether you’re an online retailer, D2C manufacturer, CPG company, etc. – Shipware can help you explore what a UPS-to-FedEx transition would look like for you, or help you procure lower rates with UPS in light of shifting events and network optimizations within the parcel industry over the past year.

If you’re currently under FedEx contract, in this environment, what doesn’t make sense?  Shippers that sit complacently on their current pricing program while FedEx raises rates and improves their margins? Or, shippers that go through an effective negotiation supported by Shipware and are now seeing pricing that reflects a willingness from the carrier to pass along the increasing margin in the form of deep discounts?

FedEx envelopes

FedEx Announces 2020 GRI: How Will it Affect Individual Shippers?

By Shipware | FedEx, News

FedEx announced, on September 16, 2019, their annual general rate increase for 2020. Effective January 6, 2020, FedEx Express (Domestic, US Export and US Import), FedEx Ground, and FedEx Home Delivery shipping rates will increase by an average of 4.9%, while FedEx Freight will increase rates by an average of 5.9%.

How will this affect individual shippers? There is often a discrepancy between the announced general rate increase and the effect that the increase has on individual shippers. If you’re a shipper that routinely ships large packages, long-zone express, three-day express, or ships to remote areas, it is likely that you will be subject to an increase much larger than the stated 4.9%.

Our team at Shipware will perform a detailed analysis of the announced increases over the next week, but in the interim, here are some areas which will likely have the most impact:

1. FedEx continues its emphasis on penalizing large packages in its networks. Notably, Additional Handling – Dimensions and Weight and Oversize will see large increases.

  • Additional Handling – Dimensions will increase by 11.1% to $15
  • Additional Handling – Weight will increase by 20% to $24
  • Oversize packages have now been broken out by service type. Express and Commercial Ground packages will increase by 11.1% to $100, but home delivery will increase by 33.3% to $120

2. FedEx has placed a new emphasis on “Extended” Delivery Area Surcharges (DAS). Zip codes designated as extended delivery area will incur a much larger increase than their non-extended DAS counterparts.  Refer to the full table below for the full breakdown of the increases.

3. The ground minimum package charge (zone 2, 1 pound list rate) has increased by 4.84% to $8.23. Commercial ground increases are similar across weights and zones:

Screen Shot 2019-09-18 at 2.59.28 PM

4. Longer zones have larger increases than shorter zones for express services. This will generally affect shippers with one distribution center more significantly.  This discrepancy can be seen on the chart below:

Screen Shot 2019-09-18 at 3.00.36 PM

5. Three day shipping has a larger increase than other services. Three day is often distributed on the same Two Day/Express network and is likely close for FedEx in cost-to-serve, but with lower revenue for FedEx.  Note the increases as displayed by weight vs. the other services (increases across weights are similar):

Screen Shot 2019-09-18 at 3.01.11 PM

The following table shows the average increases by domestic service and the associated minimum charge increases:

Screen Shot 2019-09-18 at 2.58.39 PM

This table shows assessorial increases for FedEx’s most commonly assessed charges:

Screen Shot 2019-09-18 at 2.59.00 PM

Effective January 20, 2020, new surcharge ratings will occur.  Some are likely to be impactful for many shippers and further emphasize FedEx’s stance on large packages.  Here are the highlights:

  • Additional Handling – Weight will now apply for domestic express and ground for packages with an actual weight greater than 50 pounds (down from 70 pounds). 70 pounds is still the threshold for international export and international ground.
  • Additional Handling – Dimension, Packaging and Weight will now apply to US imports (greater than 70 pound actual weight is the threshold for imports/weight)
  • Additional Handling – Freight will now apply to express shipments with a handling unit measuring greater than 62 inches along its longest side (previously 70 inches)
  • Oversize will now apply to express US international shipments but will not have a 90 pound minimum billable weight (domestic and international ground are still subject to the 90 pound minimum billable weight)
  • Fuel surcharges will now apply to Additional Handling surcharges (including peak for 2020), Collect on Delivery, and Signatures (full details here: https://www.fedex.com/en-us/shipping/fuel-surcharge.html)

FedEx has also announced that they will not assess additional fees for residentials shipped during the holidays but will continue to assess additional fees for additional handling ($4.10), oversize ($37.50), and unauthorized packages ($435).

As is the case with each annual rate increase, it is vital to understand how all changes combined will impact your individual characteristics and, ultimately, your overall shipping costs. However, understanding the financial impact to your organization is not a simple or straightforward analysis. If you would like an in-depth understanding of how FedEx’s 2020 increases will affect you, Shipware will perform a complimentary and customized analysis for your organization. Email inquiries@shipware.com to learn more.

 

Matt Bohn,

Senior Consultant, Professional Services

Shipware, LLC

 

Matt Bohn is a Senior Consultant, Professional Services at Shipware, LLC, where he works to optimize carrier contracts for high-volume shippers.  Matt has nine years of previous experience as a Revenue Management Advisor at FedEx, where he analyzed and developed contracts for some of FedEx’s largest eCommerce shippers.  Matt has transitioned to helping similar shippers dramatically reduce their shipping costs.  He can be reached at mbohn@shipware.com.

Ups-vs-fedex

UPS® vs. FedEx® for International Shipments

By Shipware | FedEx, Shipping Knowledge, UPS

If you’re sending items internationally, you’re entering an even more complex shipping world than the domestic one you may already know. According to FedEx, 30% of all U.S. export shipments are from small businesses, which also make up the fastest-growing segment of U.S. exporters. Whether your company is a small, medium or large business, not understanding the various shipping options can be costly.

There are a lot of factors to consider when determining the best carrier for international parcel service, UPS vs. FedEx. In this post, we dig into those factors to give you a better idea of which service might be better for your business, or at least which ones you’ll want to focus on as you investigate the pricing and delivery options most important to you.

A warning: the services these carriers offer can sound the same, with terms like Worldwide Express, Worldwide Express Plus, Express Critical International, International Priority, International Economy, International Priority Freight, International Economy Freight, etc. The good news is there are many options. But the bad news is that comparing the services takes a lot of time and effort.

Rates to Ship Internationally

It’s impossible to provide a thorough description of every rate and package type for every service offered by UPS vs. FedEx. Know that the general rack rates of UPS vs. FedEx are pretty similar. Rates can change depending on the discounts your company negotiates, making an apples-to-apples comparison impossible. Your international parcel service rates may be different than a neighboring company shipping the same size or weight package.

UPS offers a handy at-a-glance chart with shipping services with icons showing special delivery options like Saturday service, returns/exchange service, and electronic export information. You can sort by earliest arrival or service name. FedEx also offers a listing of its service types, paired with basic shipping needs, like early delivery to key global markets, delivery in 1-3 days worldwide, or economical delivery to Canada. This makes it easier to narrow down services.

Rate Calculators

When in doubt, you can plug your package information into each company’s rate finder, to determine the cost and delivery options for individual packages. This is helpful when your shipping needs don’t fit your typical shipping patterns, or if you infrequently ship outside the U.S. Remember that the shipping rates quoted or listed may not be final, as the carriers retain the right to determine the weight and size on their own, there may be additional delivery charges, currency conversion fees, and the inevitable fuel charge, the price changing by the week.

The FedEx rate calculator will also give transit times for the chosen service or services, and you can choose a quick or detailed quote. You can also call FedEx International customer service at 1-800-GoFedEx for rate help as well. Of course there’s a similar UPS rate calculator, offering shipping rates and international delivery times for that carrier.

Dimensional Weight

FedEx and UPS sometimes use different dimensional (DIM) weight factors. For international shipping services, both use the greater of the DIM weight compared to the actual weight, for billing. The actual package weight is rounded up to the next whole pound. The DIM weight is the length in inches, multiplied by the height in inches, multiplied by the width in inches, divided a denominator. UPS applies 139 as a denominator for daily rates or 166 for retail shipping rates. FedEx only divides by 139 for international parcel shipping rates.

Additional Fees

The quoted shipping rate may not include additional fees, just as domestic shipping also has additional service fees. Some are the same types of fees, such as fees for signature upon delivery, proof of delivery, dangerous goods, Saturday delivery, Saturday pick-up, additional handling, address correction, fuel surcharges, out-of-delivery area, invalid account number, and residential delivery. But there may be unique fees for international services, such as electronic export filing, ancillary clearance service, and duties and taxes. Not all fees will be charged on all shipment types – as always it pays to check the FedEx Service Guide or the UPS surcharge list.

Number of Delivery Countries

Both FedEx and UPS ship to more than 220 countries and territories. A FedEx international service map highlights which international services are available in which locations. UPS notes that they ship to every address in North America and Europe. Not all shipping services are available for all international locations, so that may be an issue when choosing a carrier for a specific package. The rate calculators will not allow you to select a location where the company doesn’t offer that service type.

Tracking

When looking at UPS vs. FedEx tracking, know that both carriers offer multiple tracking methods. UPS tracking lets you track by reference number, on a mobile app, chatbot on smart speakers, Facebook Messenger and Skype. You can log into your UPS account to track up to 75 of the most recent shipments, and you can store 50 tracking numbers in a recent history table. In addition, UPS offers Quantum View Manage, a software program for small to mid-size businesses with light to heavy international (or domestic) shipping needs. It provides a consolidated view into shipping status and reporting tools, with information potentially viewable by customers as well.

FedEx tracking also offers a myriad of options. That includes tracking up to 30 shipments from pick-up to drop-off, using tracking numbers, account numbers, order numbers, or door tag numbers. FedEx’s version of the small/mid-size business software is called FedEx Insight, allowing tracking across multiple accounts and locations. The FedEx Desktop program lets you receive shipping notifications and to send/receive email tracking results. FedEx offers a mobile app as well. Lastly, FedEx has a global tracking page for searching individual tracking numbers.

Insurance

Sending a package across the country is concerning enough, but it can be worthwhile to insure packages delivered globally. FedEx’s limit of liability is $100 for international packages without additional coverage. For FedEx insurance, expect to pay $1 per $100 of declared value, or $9.07 per pound, whichever is greater.

UPS covers most international parcel shipping with a declared value of $100 or less, at no cost. Companies can declare a value up to $50,000 per package, and insurance generally costs $1.05 per $100 over the base amount.

Reliability

Both companies offer money-back guarantees for most services. FedEx offers a money-back guarantee if they miss their published or quoted delivery time, though customs delays negate that. If they are passing off the goods to another carrier (cartage), FedEx only guarantees international delivery times for the FedEx service portion. This would relate to freight service. UPS also offers money-back guarantees for Worldwide Express Shipping. Both carriers reserve the right to suspend guaranteed delivery dates during peak seasons.

Membership and Discounts

Both FedEx and UPS offer discount programs. FedEx offers a number of ways to take advantage, including using AmEx as your billing credit card, or via other affiliate programs. The FedEx Business Perks membership program offers up to 28% discounts on a variety of international FedEx Express services, as well as up to 15% discounts on FedEx Ground and FedEx Home Delivery services. Your business will have to show qualifications for whatever program it wants to join, which could be as simple as providing proof of listing in a local directory.

UPS offers small business shipping discounts as well, basically by signing up online. Your business can save 40% on international air shipments through your UPS account. Their small business program offers additional savings benefits, including discounts on packing, printing, shredding, mail/package receiving and notary service.

Customer Service

Which offers better customer service options, UPS vs. FedEx? We’d probably go with FedEx, at least for online help. FedEx offers a long list of links for specific information, that an international shipper might need to consult. That ranges from learning more about shipping international freight, to tracking the status of an international package, to instructions for creating international shipping documentation and labels. They offer a similar list of FedEx phone numbers for international shipping. UPS has contact information and some support on its international customer service page as well.

How Shipware Can Help Negotiate Shipping Rates

Does this guide leave you more informed, more confused, or both? Shipware can help. With shipping, rates change depending on the contract. The experts at Shipware have deep experience in-house on the carrier side, and know what terms can be negotiated and by how much. We’re likely to get you lower contracted rates than you can get on your own, whether negotiating shipping incentives, surcharges, or changing the denominator for DIM weights.

Even without negotiating rates, though, Shipware can save you money by ensuring that your company is capturing the savings from any unmet carrier service guarantees, or via improper billing. Our services pay for themselves out of that savings, leaving companies with no out-of-pocket expenses for the services and no additional work once the system is set up. We offer new customers the opportunity for a free audit to see how much we can save your company in shipping payments recovery. If we don’t save you money, we will give you $10,000. There’s nothing to lose and everything to gain.

FedEx fuel surcharge increase March 2019

FedEx® Raised Its Fuel Surcharge. Did You Notice?

By Shipware | FedEx, News

Fuel charges are rising at FedEx, and you may not know this from your daily shipping reports. As of March 18, the surcharges for FedEx Express and FedEx Ground services rose to 7% or higher, and are the highest they’ve been in all of 2019.

 

How FedEx® Fuel Surcharges Work

The FedEx fuel surcharge rates change depending on the fluctuating price of fuel per gallon (jet fuel for FedEx Express and diesel fuel for FedEx Ground). The FedEx Express surcharges are based on U.S. Gulf Coast (USGC) spot price per gallon of a kerosene-type jet fuel. For FedEx Ground, that rate is tied to the weekly published national U.S. on-highway average diesel fuel price per gallon.

Each week there’s a lag between the fuel price index date and the fuel surcharge posting on the FedEx site. For example, surcharges for the week of April 8-14 are based on weekly fuel prices reported on March 29 for FedEx Express, and April 1 for FedEx Ground. The surcharge changes are effective each Monday, with the surcharge percentage available the previous Friday. FedEx says that the surcharge percentages are subject to change without notice, per their terms and conditions.

Here’s what you can expect for FedEx Express and FedEx Ground surcharges going forward, based on our experience.

The FedEx Express fuel surcharge increase will probably range from 15% to 25% throughout this year, fluctuating by week. FedEx Express service fuel surcharge rates apply to U.S., U.S. export, U.S. import and U.S. to Puerto Rico shipments. Domestic rates for fuel surcharges for the weeks of April 1-7 and April 8-14 were 7.5% for domestic and Puerto Rico shipments, 8.5% for export, and a whopping 10.25% for import. The export and import rates were actually not the highest for this year, with import rates going as high as 9% and export rates topping out at 10.75%.

The Ground fuel surcharge increase will likely stay very close to a 4% increase throughout this year. Surcharge rates for the weeks of April 1-7 and April 8-14 were 7%, up a quarter percent from the previous two weeks.

 

What Does This Fuel Surcharge Increase Mean for You?

Without knowing it, your shipping rates just went up this year, and there’s no carrier bulletin that will make this announcement to you. For companies with thin margins, these fuel surcharge increases will impact your bottom line in a big way. It’s more serious, of course, for the FedEx Express rates, with a larger increase than Ground rates, but even a 4% increase is a big deal. For companies shipping a high volume of expedited packages, the 15-25% fuel surcharge will really hurt.

Of course, there are ways to stave off carrier increases or at least protect your contracts so you’re not paying more than you need to. Two options to consider are getting expert negotiation help, and auditing your carrier bills automatically.

Parcel and Freight Contract Negotiation: Without access to pricing expertise and inside knowledge of what discounts carriers will negotiate, it’s hard for shipping companies to make a dent in their contract terms. With former carrier executives on staff, Shipware can conduct the actual negotiations or coach your team through them.

Freight Invoice Audit: Your company is likely missing earned discounts and refund credits, that won’t be given to you without filing a claim. Shipware’s AI software scours shipping invoices to find and file for those refunds, without disturbing your company’s process or costing you time. We save clients 10-30% on their shipping invoices, with fees coming out of the savings.

Carrier Contract Optimization

FedEx Dimensional Weight

Understanding FedEx® Dimensional Weight Pricing

By Shipware | FedEx, Shipping Knowledge

When sending a package to customers, a shipper is trying to accomplish several goals: get it to the customer on time, get it to the customer in good condition, and get it to the customer at a reasonable price. The world of shipping is incredibly complex, and determining the cost to ship each package sometimes seems to require a PhD. Instead of just measuring the package size and weight to know determine the price, one other factor major carriers use is dimensional weight pricing. FedEx dimensional (DIM) weight has changed in the last few years.

Here’s what you need to know about FedEx dimensional weight and ship rates.

Calculating Dimensional Weight

Dimensional weight determines a package’s density rather than just its actual size or weight. That DIM weight reflects the amount of space the package will occupy in transit, compared to its physical weight. Think about it in terms of package volume, the space it takes in the truck or plane, in addition to the weight of that volume.

The simplest way to understand a package’s dimensional weight calculation is to weigh the physical package, including its contents and packaging materials. Physical weight pricing does not involve measuring the package in any way – it’s purely how many pounds the package weighs on the scale.

The dimensional weight calculation uses a formula to determine the DIM weight. That formula rounds each measurement to the nearest whole inch. If it is less than half an inch, the number will be rounded down, and if it’s more than half an inch, it will be rounded up. This is the DIM weight formula:

DIM weight = package length in inches x package width in inches x package height in inches / DIM divisor

The DIM divisor is a set number specific to each carrier (though it can be the same number). It is considered the base weight of 1 cubic foot of space, or 1,728 cubic inches. Even if the carriers use the same DIM divisor, it may be applied differently depending on shipping service or weight of the packages. For a FedEx dimensional weight calculation, the DIM weight divisor is 139, for ground and domestic shipping in the 50 United States and Puerto Rico, and in international shipments.

The DIM weight is used as the billable weight if it’s higher than the physical weight. FedEx recommends these steps to determine which weight would be used.

  • Calculate the DIM weight, or cubic size, by multiplying the length, height and width in whole inches. Then divide that by 139.
  • Calculate the actual weight of the packages using a scale, increasing fractional numbers to the next whole pound.
  • Compare the DIM weight to the actual weight, and the larger one would be used for rate calculation.
  • For multiple packages in the shipment, include the total billable weight of the packages.

For example, if you are shipping a package that is 20 x 12 x 6 inches, the cubic volume is 1,440 cubic inches, and it’s divided by 139 for a dimensional weight of 11 pounds (rounded up). The DIM weight will be used as a billable weight unless the actual package weight is 12 pounds or more.

Pros and Cons of DIM Weight

Carriers want to maximize space on their vehicles. Using DIM weight as the pricing factor encourages shippers to reconsider their packaging, so they are increasing their efficiency and using less space. The practice discourages shippers from including too much lightweight packaging materials or air in their parcels, if possible. Carriers can then fit more packages in their vehicles. Shippers can potentially decrease shipping costs by increasing packaging efficiency.

The good news for your company is if it ships high-density goods, you may be paying less than you would pay with strictly weight-based pricing.

Of course, the use of dimensional weight has not had a net zero effect in pricing. Prices have gone up, as e-commerce has greatly increased the quantity of shipping in the United States and abroad. While FedEx has been using DIM pricing for air express for a while, it introduced dimensional weight for freight and ground shipping in late December, 2014. Experts estimated that shippers who didn’t adjust their packaging would see shipping cost increases of 5 to 25%. Those shipping lightweight but bulky packages would be hit the hardest.

How Dimensional Weight Use Differs Between FedEx® Services

FedEx services used DIM weight differently, and the FedEx Service Guide spells out the rules.

FedEx Express

Any shipments in the customer’s own packaging will use DIM weight. It also can apply to FedEx packaging. A minimal billing weight applies for all FedEx Express shipments. For U.S. shipments, applying dimensional weight is on a per-package and a per-shipment basis. For shipments to Puerto Rico and international destinations, DIM weight applies per shipment. If the DIM weight is higher than the actual weight, DIM weight will be used.

FedEx Ground

For FedEx Ground, applying dimensional weight is for all shipments on a per-package basis. If the DIM weight is higher than the actual weight, DIM weight will be used. If the package weighs more than 150 pounds, a prorated per-pound rate will be used. Package dimensions and shape may change during transit, which can affect the package’s dimensional weight and surcharge eligibility. If the package dimensions change during transit, FedEx may make appropriate adjustments to the bill of lading, or shipping charges, at any time.

FedEx Home Delivery

If the residential delivery package has a DIM weight greater than 70 pounds, it’s handled the same as a FedEx Ground package with the same DIM weight shipped under the same circumstances. There are also FedEx Home Delivery fees for residential delivery, and other related shipping charges.

FedEx Express Freight

DIM weight is only applied on a per-freight handling unit. If the DIM weight is higher than the actual weight, DIM weight will be used. A minimal billable weight applies.

FedEx International Priority Freight

DIM weight is used on a per-shipment basis.

FedEx International Economy Freight

DIM weight is used on a per-shipment basis.

FedEx SmartPost

SmartPost, a joint service offered with the U.S. Postal Service, uses DIM rating.

The higher weight (DIM or actual weight) will be used as the billable weight to calculate ship rates for import-rated international shipments to the U.S., and U.S. export shipments.

 

How to Lower FedEx® Dimensional Weight Prices

Shippers are smart to consider pricing of their shipping services, and determine how to lower FedEx ship rates they’re paying. The system can seem unfair if paying for DIM weight when the physical weight rate is lower. Spending some time determining how to decrease those costs can pay off in both the short run and the long run, especially if shipping dense packages.

It’s time to make friends with the FedEx DIM weight calculator, which helps you determine the DIM weight so you can better understand your options.

Step back and evaluate what you’re shipping.

  • If you’re shipping lightweight items, can you decrease the packaging sizes?
  • Can you ship the items in multiple boxes or send the item unassembled?
  • Can you rearrange the parts inside to better utilize the space?
  • Can you vacuum seal the contents to reduce the air inside?

The goal is to decrease the package sizes as much as possible, without sacrificing package integrity. Play around with the box size, as even decreasing it by an inch might decrease the shipping cost. Using different filler material, that doesn’t bulge or expand, can help as well. After all, the larger your package volume, the larger its dimensional weight. Maybe you can use bubble or poly mailers instead of boxes, which lowers the weight and packaging sizes.

FedEx and their Package Testing and Design Lab can even help you find better packaging solutions, at no cost to you.

If you can’t shrink your package down to a reasonable DIM weight, consider the goods you’re shipping. It may be a better business practice not to sell certain items if the shipping costs are not going to be profitable for your business. Consider changing the mix of goods you sell to goods with better DIM weights and fewer FedEx surcharges, unless the customer is willing to pay the higher prices. Explaining to customers how DIM weight works may make them more willing to pay the higher prices.

Negotiating Ship Rates

One other way to lower shipping costs is to negotiate pricing with FedEx. Some companies do this themselves, however professionals with a greater understanding of the total market can usually get better pricing. Some of the factors which a shipper may be able to negotiate with FedEx include:

Cubic threshold: If you can increase the cubic threshold, you can increase the space you need without raising costs.

DIM factor: The 139 divisor might be negotiable depending on your shipping volume and other variables. The larger the denominator, the number below the line, the smaller the DIM weight output will be. FedEx’s 2015 divisor was 166. Since then, it’s dropped to 139, costing its customers more money.

Incentives: If the DIM weight factors can’t be changed, the carrier may be willing to negotiate on other discounts and services, like surcharges.

FedEx is only one carrier using DIM weights for pricing. Increasingly, freight companies are using them as well, especially for LTL (less-than-truckload) shipments. DIM weight pricing is not going away any time soon, so it’s important to get the best pricing you can by evaluating your shipping factors, and negotiating the best prices.

 

Are Your FedEx Rates the Best You Can Get?

Carrier Contract Optimization

Fedex_Home_Delivery_SmartPost

FedEx® Home Delivery vs. FedEx® SmartPost: What’s Better for Shippers

By Shipware | FedEx, News, Shipping Knowledge

Shippers have to balance cost and time. Get the package delivered to the customer sooner, and it’s likely going to cost more money.

Sometimes it’s worth the cost and sometimes it’s better to save a few dollars and add a few days to the final delivery time. But cost and transit time aren’t the only two factors when deciding on whether to ship via FedEx Home Delivery or FedEx SmartPost.

Let’s start with the basics. What’s the difference between FedEx Home Delivery and FedEx SmartPost? Both are FedEx products that deliver packages to residences.

With FedEx Home Delivery, FedEx controls the package the entire route, from pick-up to front-door.

SmartPost is a last mile final delivery partnership between FedEx and the United States Postal Service (USPS). This collaboration provides less expensive shipping costs with greater delivery coverage in the United States and territories, but at the expense of a slightly longer delivery window. It’s a win-win for all involved.

Shippers and customers like the service because it’s more cost effective than FedEx Home Delivery, but with the excellent tracking services and visibility provided by FedEx, for an optimal website experience.

The carriers like it because it addresses a pain point. For FedEx, that pain point is home delivery, a more expensive, time consuming and challenge-filled prospect than delivering to commercial customers.

The postal service mandate is daily delivery to almost every home in the United States, so it’s not much more work to deliver a package. And the USPS gets a cut of the funding, addressing one of their pain points.

 

How FedEx® SmartPost Works

FedEx collects and routes the packages the same way it does with any other package. They pick up parcels from the shipper’s location and sort them the same day at the FedEx distribution facility. The packages are then transported via the FedEx Ground shipping network. The shipments arrive at one of 34 FedEx destination hubs, where they’re sorted and brought to the local post service office or bulk mail center closest to the final delivery location. At this point, the packages are officially handed over to USPS for the final leg of the journey, and they’re brought to the residence, along with the rest of the USPS mail.

While carriers are offering more overlapping options these days, there are still many differences between them, making one shipment a good fit for SmartPost because it’s disqualified for FedEx Home Delivery, and another a better fit for Home Delivery because of timing issues, for example. Here are some of the pros and cons of each.

FedEx SmartPost Pros and Cons

SmartPost Pro: No residential delivery surcharges

This is a big one! The current rack rate for a residential surcharge via FedEx Home Delivery is $3.65 per package. Send it SmartPost, and that fee disappears since FedEx isn’t actually making the residential final delivery themselves.

SmartPost Pro: 100% United States coverage

The USPS already delivers to nearly every residence in the country, so they can easily deliver FedEx packages along with the regular mail. One postal service advantage is that they can also deliver to post office boxes and military and diplomatic APO, FPO and DPO destinations. FedEx does not deliver to P.O. boxes or to military bases or diplomatic locations.

SmartPost Pro: FedEx tracking is available

You can still use FedEx tracking to see where your SmartPost packages are at any given time, in spite of them switching carriers at the end.

SmartPost Con: FedEx SmartPost does not pick up packages originating outside of the contiguous United States

Alaska and Hawaii, along with the United States territories, are not served by SmartPost for pick-ups. That said, SmartPost can do the deliveries.

SmartPost Con: SmartPost takes longer than FedEx Home

Estimates vary, but transit time is longer for SmartPost packages compared to FedEx Home Delivery. Estimates range from 1.5 extra days to five days for SmartPost.

SmartPost Con: No FedEx “on time or it’s free” guarantee

Both FedEx Home Delivery and Ground offer a full refund if packages aren’t delivered on time or by the right date. With SmartPost, there is no guarantee, as they don’t control the postal service final delivery times.

SmartPost Con: Damage and loss claims are not always available from FedEx

Once the package is handed over to the postal service, FedEx has no more liability for any loss or damage. Claims can be made with the postal service, however, that’s a separate process.

 

FedEx® Home Delivery Pros and Cons

Home Delivery Pro: No Saturday delivery surcharge

Contrary to popular belief, Saturday delivery actually carries no surcharge, making this option more financially viable for shippers. SmartPost also has no Saturday delivery surcharge.

Home Delivery Pro: The package can be held at another location

If the customer is not going to be home for final delivery, the customer can schedule the package to be delivered to a FedEx location, even while it’s already en route.

Home Delivery Pro: Delivery is faster than SmartPost, and guaranteed

Home Delivery is guaranteed in 1 to 5 business days within the contiguous United States, and 3 to 7 business days to and from Alaska and Hawaii. SmartPost packages take longer and do not come with a money-back guarantee.

Home Delivery Con: Home Delivery is only available in the 50 United States

You cannot use Home Delivery to send a package to someone in the foreign service or a soldier using an APO address, for example. Nor does Home Delivery include post office boxes or United States territories.

Home Delivery Con: No Saturday pick-up

Home Delivery will make Saturday deliveries in most areas, but only picks up Monday through Friday.

Considerations When Choosing FedEx® SmartPost or FedEx® Home Delivery

Shippers must add SmartPost into the contract in order to offer or use this service. It’s a helpful one to add in when giving customers shipping costs options, whether the shipper is offering free shipping or reduced shipping, or charging customers. Here are the reasons why a shipper or a customer might choose one service over another.

1.) Fees: Both services offer Monday through Saturday delivery, but FedEx Home Delivery charges a residential delivery fee, while SmartPost does not.

2.) Non-traditional residential address: The customer lives on a military base or wants shipping to go to a post office box. That customer cannot use FedEx Home Delivery.

3.) Cost is the greatest factor: SmartPost packages are usually the less expensive shipping costs option, but package size or other factors could affect pricing.

4.) Time-sensitive: FedEx Home Delivery promises 1-5 business day delivery time within the contiguous United States, or 3-7 business days to and from Alaska and Hawaii, and guarantees the final delivery date. SmartPost typically delivers in 2-7 business days based on distance (note “typically” as the timing is not guaranteed). Delivery outside the contiguous United States can take longer. Some shippers like to run internal studies tracking the transit time for various services to different locations.

5.) Saturday pick-up: FedEx Home Delivery does not pick up packages on Saturdays (it uses FedEx Ground service). SmartPost does offer Saturday pick-up. Both services offer Saturday delivery.

6.) Declared value: If you want to declare a parcel value of more than $100, you’ll need to choose FedEx Home Delivery. The declared value for SmartPost packages is a maximum of $100.

7.) Additional services: FedEx Home Delivery allows additional services, such as FedEx Delivery Signature Options, Return Solutions, FedEx Delivery Manager, a money-back guarantee, collection on delivery, declared value, signature proof of delivery collection, and evening or appointment delivery times. These features are not available for SmartPost. The customer can also request delivery to a FedEx location instead of the residence.

8.) Size matters: Both services max out at 70 pounds per package. However, the dimensional weight is different. Home Delivery allows 108” in length, 165” in length plus girth (considered L+2W+2H). SmartPost sizing is a maximum of 130” in length plus girth.

9.) Surcharges: FedEx Home Delivery has more surcharges than SmartPost. SmartPost package surcharges include: non-machinable packages (parcels with dimensions between 27”+, any two dimensions greater than 17”, more than 35 pounds, cylindrical tube packaging); delivery area; balloon items (weighs more than 20 pounds, but measures 84” to 108” in length + girth); oversize items (measuring 84” to 130” in length + girth); package re-labeling for parcels requiring an over-label or hand keying; third party billing (billing to an account that’s not related to the shipper).

When Offering SmartPost to Customers

Online shoppers expect not only ground service to be offered as a cost-effective shipping option, but economy ground as well, with 69% of shoppers expecting a choice including both services at check-out, according to the Pulse of the Online Shopper survey by UPS. A full 42% of shoppers will choose the economy ground option, and 20% will choose the ground option, with SmartPost falling into the economy ground category. The transit time for that category is 5 to 7 days from purchase. The survey showed that shoppers are looking for the best shipping costs. It also showed that 51% of online shoppers are looking for free shipping and discounted shipping costs when choosing one retailer over another, making SmartPost a smart shipping choice for retailers.

Shipping costs are not just a line item – they can be a competitive advantage or a liability, so it pays to ensure that your company is getting the best prices while meeting customer expectations. It’s hard to know whether you’re getting the best deal and determining which ones deserve money back, for missing the time or day guarantee. Invoice audit and recovery services, like those offered by Shipware, can often save shippers up to 30% of their annual shipping spend, by automatically sending claims to the carriers for missed delivery times/dates, missing discounts, and total billing accuracy. Shippers leave $2 billion on the table each year in unclaimed refunds from FedEx, UPS, and the LTL carriers.

Shipware can save money for 90% of shippers, and we offer a free shipping analysis. If we can’t offer you savings over what you’re paying and recovering now, we will give you $10,000.

Shipping savings

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What Is a FedEx® Shipping Exception?

By Shipware | FedEx, News, Shipping Knowledge

Sometimes, a FedEx package might not arrive on the doorstep when promised. Or it does, but the shipper or customer receives a shipping exception notification before it arrives. While this can be alarming to a customer, it is usually not a cause for concern, and it’s possible the reason behind the exception will result in a refund of the shipping charges (if you ask in just the right way).

Shipping Exceptions: Understanding the Basics

FedEx lists 10 status exception codes noting the reason for a change to the delivery, “business as usual,” model for a specific package. Again, not all indicate a package will be late, just that something different happened. That can be a delay due to customs, attempted delivery to a closed business, a pick-up exception where the package did not originate from the shipper’s usual location, or even that FedEx is holding the package to deliver closer to its commitment time. A package with a damaged bar code, a holiday, or someone eating lunch and not answering the door to sign for a package can trigger a shipping exception as well.

How to Avoid the Shipping Exception Code

Some shipping exceptions you can’t avoid. Like the weather or a business closing early for the day. However, there are others you can plan for.  Here are some to consider:

  • Revisit quality assurance: Packages can be delayed if one digit is off on the ZIP code or numeric portion of the address. If you notice an increase in errors, that might point to a weak spot in your operations. Perhaps an employee could spot check outgoing packages to ensure addresses are proper, or that barcodes are easily readable and adhere well to the packages.
  • Revisit packaging:  If boxes are leaking or falling apart, that could be your responsibility as the shipper. Not only will a package and potentially its contents be damaged (with you at fault), it could be delayed as well. If you have any reports of damaged packages, audit your system to see if there’s a problem in-house or with your distributor. FedEx provides packaging guidelines to eliminate or reduce problems.
  • Shipment damage: In rare cases, FedEx can damage a package in transit, which may result in a delay as the carrier investigates. FedEx typically covers the first $100 in damages and provides additional coverage that can be purchased when setting up shipping. Third-party companies also provide insurance options, some of which are less expensive than policies offered directly through the carriers. If you or your customer gets an exception message relating to damage, keep all original packing materials once the item is delivered in order to process the claim.
  • Remind customers that delays could be their responsibility: If customers are typing in their own shipping information, your website can automatically remind them to double check their entries to confirm they’ve reviewed it. Remind them that any errors on their part could result in a delay and potentially additional charges. While no customer wants a shipping exception or delay, if they had to confirm their information, they may realize they’re at fault for shipping hiccups.
  • Building in extra time around holidays: An obvious time to alert customers of potential shipping delays is national holidays like Thanksgiving and Christmas. But local holidays like Mardi Gras and St. Patrick’s Day are also legitimate reasons for a FedEx shipping exception in certain parts of the country.

Alerting customers to potential delays before the package is sent goes a long way in setting customer expectations and improving relationships. Getting a service exception for a delay is less problematic for customers when they knew before shipping to anticipate one.

Understanding the FedEx® Money-Back Guarantee

There is sometimes recourse if your shipping exception results in a delayed delivery, defined as more than 60 seconds after FedEx’s published or quoted time. FedEx offers this money-back guarantee for transportation costs for every U.S. shipment via FedEx Express, FedEx Express International, FedEx Ground, and FedEx Home U.S. deliveries, FedEx International Ground if using the brokerage-inclusive option, and some FedEx Freight shipments. Customers can receive a credit for the shipping charges, or a refund.

The money-back-guarantee will not be applied automatically. It leaves the onus on the customer to stay on top of the complicated and sometimes narrow band of allowable refunds. That’s where Shipware can help, at no cost to you.

Of course, there’s a long list of exceptions, where refunds won’t be provided. It’s helpful to understand those exceptions, so you know how to maximize shipping success and also know when you legitimately can collect should delays arise.

Exceptions where the money-back guarantee does not apply may include:

  • Illegible label
  • Improper address
  • Inclement weather
  • Air traffic control problems
  • FedEx receives a request to redirect a shipment from a delivery address to hold at a FedEx location.
  • Your shipping location releases an unexpectedly large number of packages.
  • Payment instructions or your FedEx account number is not valid or in good standing.
  • The package is undeliverable or returned.
  • There was a natural disaster, act of terrorism or civil commotion.
  • There was an actual or anticipated strike, including at non-FedEx organizations.
  • There was a communications outage, at FedEx or elsewhere.
  • A FedEx Ground package was accepted after a location’s regular scheduled pickup time (adding an extra transit day to the scheduled delivery date).
  • A FedEx Appointment Home Delivery shipment didn’t include a valid telephone number for the recipient in the proper field.
  • The shipment contains dangerous goods or dry ice.
  • The shipment was delivered at specified times close to Thanksgiving or Christmas.
  • The person who was to receive or sign for the package was not available or refused it.
  • Security or regulatory delays at the recipient’s location caused the delay.

There’s more in the fine print, so don’t consider this an exclusive list. Check the FedEx Service Guide for all the details.

Requesting and Processing FedEx Refunds

Requesting and processing FedEx shipping exception refunds is highly regulated by FedEx as well. For refunds due to what they consider a “service failure,” meaning they are responsible, they require the shipper to notify them via their FedEx Billing Online application, through their invoice adjustment feature at the FedEx website, or through their telephone invoice adjustment system. The request method you must use may depend on the FedEx service. You’ll need your FedEx account number, tracking number and shipment date. And it must be done quickly. They require requests for those transportation charges to be received within 15 calendar days of the invoice date or within 15 calendar days from the shipping date, depending on how you pay for their services.

And FedEx can suspend their money-back guarantee at any time at their discretion, which would leave the shipper with no other remedy.

Does that sound like a lot of very technical work? Do you have someone on staff who can tackle that and do it quickly and accurately? If this isn’t your company’s strong suit, you’re probably losing money by doing it yourself.

That’s where a company like Shipware comes in. Shipware’s invoice and audit recovery solution is a technology that, not only identifies FedEx service issues in each client’s invoices, but automatically sends refund requests each day. The money shows up as a service credit in your account, and Shipware only receives a small portion of that as payment. There are no out-of-pocket fees for the service, and no work to do on the shipper’s part but count the savings. Onboarding into the secure Shipware platform takes less than five minutes for set-up, and then it runs automatically. You can’t completely avoid FedEx shipping exceptions, but you can get the refunds due to you if you are proactive.

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, the USPS or regional carriers, our invoice audit and contract optimization services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption of current operations. Our team of experts has over 200 years of combined carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts, and have saved our clients an average of 19 percent on shipping.

Ready to Stop Overspending?

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What Are FedEx Shipping Rates?

By Shipware | FedEx, News, Shipping Knowledge

Retailers have many concerns, and among the most pressing are shipping costs. How can you get packages to your customers quickly and more cost-effectively? FedEx is a large carrier moving nearly 14 million shipments each business day. The company has over 675 aircrafts and 175,000 motorized vehicles transporting items, and for the most part, they do so with nearly perfect accuracy, achieving 98 percent on-time delivery.

But as a retailer, when you’re managing costs, the first thing you need to know is how to determine what a package costs to ship, and equally important, whether it’s possible to reduce those costs. Let’s take a look at how to calculate FedEx shipping rates and more accurately forecast these expenses.

Understanding FedEx service options

Many variables play into the shipping costs equation, but one of the largest is speed. How quickly must your package arrive? In most situations, especially in cases of free shipping offers, slower delivery is fine. As a result, a service such as FedEx Ground is acceptable, delivering the package within several business days.

In special circumstances, faster services, such as overnight delivery, are required. For example, maybe there was a mistake internally and the package didn’t go out in time. As a result, the customer won’t have the item for an upcoming special event, and time is essential in ensuring customer satisfaction.

Understanding all available options, and the potential costs, is a good starting point for determining how these costs fit into your shipping strategy. Let’s take a look at FedEx shipping options, and then we’ll dive into exact costs.

FedEx SameDay. This service provides reliable door-to-door delivery within hours and is available seven days a week, 365 days a year. SameDay is available in all states for package weights up to 150 lbs. For packages that exceed 150 lbs., FedEx SameDay Freight can be used.

FedEx SameDay City. This service offers a door-to-door option for delivery within hours. Delivery time varies based on the distance traveled. For example, for 0-15 miles, packages typically arrive within two hours. Packages that must travel longer distances, such as more than 60 miles, can expect a delivery time closer to several hours.

FedEx First Overnight. This service is a good option when a package must be delivered early the next business day. Next-day business delivery is provided by 8:00 a.m., 8:30 a.m., 9:00 a.m. or 9:30 a.m. to most areas. For extended areas, delivery time might be by 10:00 a.m., 11:00 a.m. or 2:00 p.m., depending on the destination ZIP code. FedEx First Overnight is available throughout all 50 states and is available for packages up to 150 lbs.

FedEx Priority Overnight. This service is a good choice if your shipment needs to arrive by 10:30 a.m. the next day. Delivery might be later, however, depending on the delivery ZIP code. FedEx Priority Overnight is available in all 50 states, and for packages up to 150 lbs.

FedEx Standard Overnight. Perhaps you need a package delivered overnight, but you’re looking for a more affordable option. If so, this service provides next-business-day delivery by 3 p.m. to most U.S. addresses in all 50 states, but at a lower cost when compared with faster options.

FedEx 2Day. There are a couple of variations of this service. The first provides delivery by 10:30 a.m. to most U.S. addresses. The second service is standard 2Day but provides delivery by 4:30 p.m. to businesses and 8 p.m. to residences. Urgency will dictate which is right for your situation, but both services cover package weight up to 150 lbs.

FedEx Express Saver. Express Saver provides delivery in three business days, typically by 4:30 p.m. to businesses and 8 p.m. to residences on the third delivery day. This delivery option is available in all states with the exception of Alaska and Hawaii.

FedEx Ground. According to the FedEx website, “FedEx Ground is faster to more locations than UPS Ground.” This service level provides a more affordable option with delivery times of one to five business days within the contiguous United States and three to seven business days to and from Alaska and Hawaii. It’s also important to note that FedEx Ground cannot deliver to P.O. boxes.

FedEx Home Delivery. This service is for residential deliveries and provides arrival within one to seven business days, depending on the destination. Expectations are similar to FedEx Ground with one to five business days within the contiguous United States and three to seven business days to and from Hawaii. Delivery is typically Tuesday-Saturday between 9 a.m. and 8 p.m., and this service is available throughout all 50 states.

FedEx SmartPost. SmartPost is a contracted service that provides 100 percent coverage, including destinations beyond the U.S. border. Additionally, there are no residential or Saturday delivery surcharges. FedEx SmartPost provides an affordable option by leveraging a partnership with the USPS. FedEx transports the package until the “last mile” of delivery. At this point, the package is passed off to the local post office, and they finish the delivery process.

After looking at the service list, you might have a couple of options in mind. For example, perhaps you want to compare 2Day and FedEx Ground services costs. What should you do next? Fortunately, FedEx makes finding shipping costs easy. There are a couple of different options, both of which we’ll cover to get you started with calculating costs.

Determining shipping rates

There are two methods to find FedEx rates. The first is using the FedEx Service Guide, and the second is using a FedEx tool. We’ll cover both methods so you can select the one that is easiest for you, starting with using the Service Guide. Follow these steps to help you easily determine your shipping rate:

  1. Find the zone for your destination. The zone is critical information because it helps determine how far the package must travel. For U.S. shipments, visit the Rate Finder and select the “Rates Tools” table, then enter your origin ZIP code to see which zone your destination ZIP code corresponds to. You can also request zone information by calling FedEx directly at 800-463-3339.
  2. Determine the package weight. Once you have this information in hand, view the “Dimension Weight” section of the Service Guide. Your chargeable weight is the greater of the actual weight and the dimensional weight. View the exact instructions and formula for calculating dimensional weight on page 122 of the Service Guide.
  3. Find your rate. Use the pricing guide in the FedEx Service Guide to find the appropriate table.

For example, let’s say that you’re shipping a 5-lb. package in Zone 2, which is generally 0-150 miles from the origin to destination anywhere within the contiguous United States. Looking at page 30 of the service guide, you can see that if you selected FedEx Priority Overnight, the fee would be $34.58. However, if you selected FedEx 2Day, that cost would drop down to $19.22.

Let’s say that you’re shipping in Zone 3, which is typically 151-300 miles from origin to destination anywhere within the contiguous U.S. The cost to ship a 5-lb. package using FedEx Priority Overnight would be $48.13 for a 5-lb. package. Using FedEx 2Day service, that fee would drop to $20.55 for the same package.

In addition to the Service Guide, FedEx provides a rate and transit time tool that allows you to get customized details on rates. Enter your shipping details, including the ship from and ship to locations, the number of packages, and the weight of the package(s), and get a quote that provides pricing information. This is the easier method of the two to determine shipping costs, but it’s good to have a backup option, which is where the Service Guide is useful.

Understanding extra services

FedEx provides a variety of value-added services and surcharges. Depending on what type of package you’re sending and your individual needs, those charges may affect your total price. As a result, it’s important to understand which options are available and might apply to your shipment.

FedEx provides a complete list of options online, but one of the most common options is the delivery signature option. For example, you may use this if you’re shipping an item to an unhappy customer, and you want to ensure that it arrives. Let’s take a look at the different service levels.

No signature required. FedEx will attempt to get a signature at the delivery address, but if no one is available, FedEx will deliver the package to a safe place without obtaining a signature. This level of service is available upon request at no cost.

Indirect signature required. FedEx obtains a signature from somebody at the delivery address, whether it’s a neighbor or a building manager. If no one is available to sign, FedEx will attempt to redeliver the package. This service is available upon request on residential shipments to the United States and Canada with a declared value below $500.

Direct signature required. If you want a person to sign for the package at a specific address, you can purchase this service for $5.00 per package. FedEx obtains a signature from someone at the delivery address only. If no one is available, they will attempt to redeliver the package.

Adult signature required. FedEx obtains a signature from any person of legal age at the address, subject to their providing a valid ID. If no one qualified is available to sign, FedEx will attempt to redeliver the package. Bear in mind that the legal age varies, depending on the destination country. The cost for this service is $6.05 per package.

An additional service that is commonly purchased is declared value coverage. FedEx automatically covers liability up to $100 for damages or losses at no additional cost. But FedEx allows you to purchase extended coverage at an additional charge. Keep in mind, however, that third-party providers also provide this service. In some cases, it can be less expensive than purchasing directly through the carrier, so weigh the costs and benefits of all options.

Additionally, it’s important to note that FedEx charges a residential surcharge of $3.85 that is added to all FedEx home delivery shipments. Companies can bypass this charge by using FedEx SmartPost. Since SmartPost uses USPS for the last leg of delivery, this fee is waived, and the overall cost is much less. Additionally, Saturday delivery is available at no extra charge.

Moving forward with greater efficiency

The majority of consumers prefer to shop online. In fact, 95 percent of Americans shop online at least yearly, and 80 percent shop monthly. As a result, e-commerce is booming, and that growth isn’t expected to slow down anytime soon. But the challenge for retailers is balancing shipping costs with the pressure of providing additional services, such as faster delivery and free shipping. This leaves them asking: How can we figure out shipping costs and then work to reduce them?

Understanding costs is the first step, but after that you can play with comparing various options, such as FedEx Ground vs. FedEx SmartPost to determine which can provide the greatest savings. Striking the right balance will allow you to serve customers with greater experience and position your business to thrive in the future.

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, the USPS or regional carriers, our invoice audit and contract optimization services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption of current operations. Our team of experts has over 200 years of combined carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts, and have saved our clients an average of 19 percent on shipping.

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FedEx Shipping Insurance: A Comprehensive Guide

By Shipware | FedEx, News, Shipping Knowledge

When serving customers, companies have many considerations, including shipping and its impact on the customer experience. And when evaluating shipping options, there are a number of variables, including cost, value, and dependability that must be taken into account. But companies also must plan for what happens when something goes wrong.

A customer calls and complains that a package didn’t arrive on time, or equally as serious, the package arrives broken or in poor condition. The first priority is finding a resolution for that customer, but what amount, if any, can you recover for the loss?

FedEx is a popular carrier choice, shipping 14 million packages to 220 countries and territories daily. The company offers insurance to handle these types of situations, but how much does it cover, and what is the cost? Understanding the pros and cons of FedEx shipping insurance can help you decide what role, if any, this option should play in your business operations.

What is FedEx Shipping Insurance?

FedEx offers insurance to help offset the cost if a package is lost, stolen, or damaged. The first $100 of insurance doesn’t cost anything, but if the value of the package is higher, you can purchase additional insurance to cover potential losses.

There is a small risk of package loss during transit, but damage is more common. One study found that up to 11 percent of packages are damaged during transit. Damage results by carrier vary, but the study found the following percentage of damaged packages by carrier:

  • UPS: 11 percent
  • USPS: 10 percent
  • FedEx:7 percent

FedEx had the smallest percentage of damage in this study, but in these events, shipping insurance helps offset the cost. Purchasing the right amount of insurance is key and involves stating a “declared value.”

Understanding FedEx Declared Value

Purchasing insurance requires you to tell the carrier the value of the shipped items. Upfront proof or receipts are not required at this stage; however, if you make a claim, these will be required to confirm the value of the package.

The first $100 of insurance is free for most services; however, you can purchase insurance for more than this value (more on this shortly).

Adding more insurance to a package can be accomplished online or in person.

Also note that with FedEx insurance, the carrier will not automatically replace the item if it’s broken and can be repaired. Additionally, FedEx has a maximum declared value, which varies based on the service you select.

How Much Does FedEx Insurance Cost?

The cost of insurance varies based on the type of service that you select and the items you plan to ship. Here are a few samples of what to expect:

FedEx SameDay & SameDay City:Maximum declared value is $2,000, and the additional cost for declared value is $3 for shipments up to $300. One dollar per $100 is charged for declared values over $300.

U.S. Express package service, U.S. Ground service, and International Ground services.The additional cost is $3 for shipments valued up to $300. After this amount, it’s $1 per $100 of declared value over $300.

Direct Signature Confirmation service is available at no cost if you state the value is in excess of $500. As a result, FedEx will require a signature from the package recipient when delivering the package. If nobody is available to receive the package, the carrier will attempt delivery again. Shippers sending multiple items should also carefully consider whether shipping multiple items together makes sense. Insurance covers the entire package, regardless of the value of each item shipped.

For example, let’s say that you plan to use FedEx SameDay City, which has a maximum declared value of $2,000. You are shipping two items, each worth $1,500. In this case, it might make sense to ship the items separately to ensure you achieve full coverage.

Understanding Insurance Limitations

When using any carrier, including FedEx, it’s a good idea to verify which items are not covered or have limitations on coverage. For example, the Declared Value and Limits of Liability sections of the FedEx Service Guide explain that items of extraordinary value and those items with a value that is difficult to ascertain may not be declared. According to the FedEx site, limitations include the following:

For Shipments containing the following items of extraordinary value the Declared Value for Carriage is also limited and depends on the contents and destination of the Shipment:

  • Artwork, including any work created or developed by the application of skill, taste or creative talent for sale, display or collection. This includes without limitation, items such as paintings, drawings, vases, tapestries, limited-edition prints, fine art, statues, sculptures, collector’s items, customized or personalized musical instruments or similar items.
  • Antiques or collectable items, or any commodity that exhibits the style or fashion of a past era and whose history, age or rarity contributes to its value. These items include but are not limited to, furniture, tableware, porcelains, ceramics and glassware. Collectable items may be contemporaneous or relating to a past era.
  • Film, photographic images, including photographic negatives, photographic chromes and photographic slides.
  • Any commodity that by its inherent nature is particularly susceptible to damage, or the market value of which is particularly variable or difficult to ascertain.
  • Jewelry, including but not limited to, costume jewelry, watches and their parts, mount gems or stones (precious or semiprecious, cut or uncut), industrial diamonds and jewelry made of precious metal.
  • Precious metals, including but not limited to, gold and silver, silver bullion or dust, precipitates or platinum (except as an integral part of electronic machinery).
  • Furs, including, but not limited to, fur clothing, fur-trimmed clothing and fur pelts.

FedEx might not exclude insurance on the above items outright, but may limit the amount you can declare. For example, FedEx permits a maximum declared value up to $1,000 for the following items:

  • Artwork
  • Photos
  • Glassware
  • Jewelry
  • Furs
  • Precious metals
  • Plasma screens
  • Antiques
  • Stocks, bonds, and cash equivalents
  • Collectibles, such as coins or stamps
  • Some musical instruments
  • Models, such as dollhouses

If you state a value that exceeds the amount allowed, you simply won’t be able to recover more than what is set forth in the FedEx rules and regulations.

How to Insure Your FedEx Package

Taking advantage of FedEx insurance is easy. When you drop off the package to be packed and shipped, simply fill out the value section of the shipping form. If the package includes items worth less than $100, don’t worry about purchasing additional insurance; coverage is already provided.

Additionally, you can pack your own item and have it picked up at your location, which is ideal for businesses shipping large numbers of packages. Ensure that you follow FedEx packing requirements, which is important if you file a damage claim. Packages that exceed $100 in value require a declared value. And all you need to do is state the value, knowing that you’ll need to have documentation if a claim is required.

Packing Details and Considerations

FedEx has guidelines about packing items, and if you file an insurance claim, these guidelines become important. In the case of damage, FedEx wants to make sure that the package was packed properly so they can determine who was at fault for the damage. If the package was not packed according to their guidelines, they may deny the claim. The carrier makes a few suggestions for packaging, including the following:

  • You may use your own packaging if the boxes are sturdy and undamaged with all flaps intact.
  • Chipboard boxes, including gift or shoe boxes, must be packed into a corrugated outer box.
  • If items are heavy, use double-wall boxes.
  • Place small packages inside a larger outer box.
  • All fragile items should be double-boxed with 3 inches of cushioning in and around the smaller box.
  • Wrap items individually with cushioning material and center them in boxes away from other items and not near the sides, corners, top or bottom of the box.
  • Bottles that contain liquids should be upright. The inner packaging should be able to contain any potential leaks.

Full guidelines can be reviewed here, which include guidelines for unique items, such as those with insurance limitations, including artwork, photos, and musical instruments.

Understanding the FedEx Claims Process

Purchasing insurance is a safeguard that most hope they won’t need. But if a customer’s package goes missing or arrives with damage, you’ll need to cash in on that insurance you purchased. But how? FedEx provides a few different methods for filing a claim, including online or by email or fax to the FedEx claims department. Filing a claim online allows you to get updates on your claim easily via email. Fax or mail must be used when filing an international claim.

After submitting your claim, contact FedEx customer service to get a case number so you can reference it if you need to check on the claim in the future. If you’re making a claim for damage, ensure that all packing materials, including the box and packing contents, are kept handy as FedEx might ask to inspect the items.

Additionally, keep your eye on the calendar. FedEx Express requires that damaged or lost package claims be made within 60 days after the shipment is sent. For international packages, claims must be made within 21 days. FedEx Ground claims have a nine-month window from the delivery date; however, if the item is lost or missing, it must be reportedwithin 60 days. If you make the claim outside the designated time frame, FedEx won’t investigate the claim.

After you make a claim, resolution is fairly quick and usually completed within a week. Once a claim is approved, reimbursement for the declared value is sent.

Shipping with Greater Confidence

Most companies ship a large number of packages each year, and the majority of those packages will arrive on time and without damage. But in a small number of cases, something goes wrong during the shipping process — a package gets damaged or appears to simply vanish, leaving the customer unhappy and looking for resolution.

Taking care of the customer is the first goal, but afterward, a company needs to recover their financial loss. FedEx insurance is one tool that can help minimize these losses. Understanding what this type of insurance coverage offers and developing internal policies for handling these situations will create smoother experiences and minimize potential loss.

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, USPS or regional carriers, our contract negotiation and invoice audit services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption to current operations. Our team of experts has over 200 combined years of carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts – saving our clients an average of 19 percent of their annual shipping spend.

fedex-holiday-shipping-deadlines

FedEx Holiday Shipping Schedule 2018

By Shipware | FedEx, News, Shipping Knowledge

Customers agonize over finding the perfect gift during the holiday season. And once it’s located, the pressure is on the retailer to deliver it as expected – and on time. Unlike other times of the year, where deadlines might be flexible, the holidays usually have hard deadlines that leave little room for error.

Part of meeting these expectations is understanding holiday shipping deadlines for every carrier that you use. Whether it’s FedEx, UPS, or USPS, having a list of deadlines ahead of time is the difference between delighting customers and losing future business. With customers shopping at record rates, the stakes have never been higher.

Consumers spent approximately $108 billion online during the months of November and December in 2017, which is up 14.7 percent from the prior year. What’s more, for the 2018 holiday season shoppers have an additional day between Thanksgiving and Christmas, which adds an additional revenue opportunity. So what can you do to get prepared? If you’re using FedEx, it’s important to mark important dates on your calendar and communicate those expectations to customers. Read on to find the FedEx holiday shipping schedule for 2018 and tips for maximizing results during this holiday season.

Important Dates for FedEx This Season

As the holidays get closer, knowing FedEx shipping deadlines is critical. If you miss an important date, you could pay more for shipping and – even worse – deliver packages late. Some retailers include a message on their website with ordering dates so that customers can plan and also to generate a sense of urgency. For example, you might say, “Purchase by December XX to get it by Christmas.”

Not sure which dates to include? Shipping deadlines vary based on what service level is selected, but typically the sooner you ship, the better. This is why having an efficient fulfillment process is so important. Sometimes shipping late is unavoidable, especially for those last-minute shoppers. Check out these FedEx deadlines for the 2018 holiday season.

  • Dec. 14 – Deadline for FedEx Ground® shipments.
  • Dec. 17 – Deadline for FedEx Home Delivery® shipments.
  • Dec. 19 – Deadline for FedEx Express Saver® shipments.
  • Dec. 20 – Deadline for FedEx 2Day® and 2Day® A.M. shipments.
  • Dec. 21 – Deadline for FedEx Standard Overnight®, Priority Overnight® and First Overnight® shipments.
  • Dec. 25 – Deadline for FedEx SameDay® shipments.

As you can see by the dates above, FedEx is unique in that it offers Christmas Day service. If retailers need to ship on Christmas Day, the company has SameDay service, which is available 24 hours a day, 365 days a year for urgent, last-minute shipments. If you need this service, visit www.fedexsameday.com or call 1.800.399.5999 to schedule a pickup. However, it’s important to note that even though FedEx offers this service, there is not a 100 percent guarantee that it will arrive on the 25th.

Retailers can access the full holiday service schedule and get information on when each service is open and available here.

Understanding Service Options

FedEx offers a variety of service options – everything from ground delivery to same-day service. Usually, the quicker you need a package delivered, the more expensive it is. But which option is right for your business and your customer? Explore the various shipping options to help you decide, and use the planning schedule above to set order-by dates.

FedEx Ground

According to the company’s website, FedEx Ground is faster and has more locations when compared with UPS Ground. This service delivers in one to seven business days, based on the distance to the destination: typically one to five business days within the contiguous United States and three to seven business days to and from Alaska and Hawaii. Check delivery times during the holiday season by checking transit times online.

Ground shipments can have a package size and weight up to 150 lbs., up to 108″ in length, 165″ in length plus girth (L+2W+2H).

FedEx Home Delivery

FedEx Home Delivery allows customers to select when they want packages to arrive, including evenings and Saturdays for most locations. Delivery time is typically one to five business days within the contiguous U.S. and three to seven business days to and from Alaska and Hawaii. Package size and weight restrictions extend up to 70 lbs., 108″ in length, 165″ in length plus girth (L+2W+2H).

FedEx Express Saver

FedEx Express Saver offers delivery in three business days by 4:30 p.m. to businesses and to residences by 8p.m. Service days are Monday through Friday, and Saturday pickup is available in some areas for an additional fee. FedEx Saver is available in all states, with the exception of Alaska and Hawaii.

Deadline for FedEx 2Day and 2Day A.M. Shipments

FedEx also offers two-day and two-day a.m. shipments. Delivery time is typically the second business day, with delivery by 10:30 a.m. to most U.S. addresses and by noon for rural areas. Find exact transit times here. This service is available in all states, with the exception of Hawaii, and package size restrictions extend up to 150 lbs. each, up to 119″ in length, 165″ in length plus girth (L+2W+2H).

In addition to understanding shipping options, it’s helpful to anticipate other fees. For example, some carriers may charge special surcharges during the holiday season. When calculating fees, it’s useful to understand these surcharges so you can price appropriately.

Account for Additional Holiday Surcharges

Many carriers, such as UPS, charge a holiday surcharge on shipping. It’s important to understand any potential surcharges because they add to the expense of sending packages to customers, especially when you’re footing the bill. Although some suspect that FedEx may implement residential holiday surcharges, similar to those of UPS, the carrier currently does not have these charges.

Retailers can take advantage of affordable, fast shipping with no additional residential surcharges on packages. However, other surcharges and fees may apply. For example, if additional handling is required on a package, there may be an additional fee, which increases from $20 to $23.20 during the holiday season. Another example is a surcharge to deliver to specific ZIP codes, such as those in Alaska and Hawaii. Find a full list of potential extra charges here.

Understand Guarantees and Limitations

Holiday shipping has little room for error and requires careful planning to avoid customer disappointment. When shipping during the holidays, it’s important to note that the normal money-back guarantee that FedEx offers is off the table. As a result, leaving a little extra buffer for shipping time is helpful. The full holiday money-back guarantee policy is included here, but see below for a quick summary of what to expect.

FedEx Ground. Packages tendered to FedEx Ground for delivery on the day after Thanksgiving will be scheduled for delivery on that day if the recipient business is open, but in any event, the delivery commitment will be extended to the next business day for application of the money-back guarantee. The money-back guarantee for FedEx Ground and FedEx Home Delivery will be suspended temporarily for packages picked up on Monday, Nov. 26, through Monday, Dec. 24, 2018. 

FedEx Express. The FedEx money-back guarantee will be suspended temporarily from Tuesday, Dec. 18, through Monday, Dec. 24, 2018, for shipments delivered by the end of the day on the published delivery commitment date for the selected service and destination. This will also be applied on Wednesday, November 21st for shipments that reach their destinations within 90 minutes of the scheduled commitment time.

 This includes most FedEx Express services, such as FedEx 2Day, FedEx Express Saver and more.

FedEx Freight. The FedEx Freight no-fee money-back guarantee is suspended for shipments with required delivery dates of Monday, Dec. 17, 2018, through Wednesday, Jan. 2, 2019. During this time, FedEx Freight will continue to provide normal pickup and delivery, except on Dec. 24 and 25, 2018, and Jan. 1, 2019, when FedEx Freight is closed, and on Dec. 31, 2018, when FedEx Freight will be open but with only pre-arranged pickup and delivery shipments being made.

In addition to ensuring that you understand what guarantees are available, it’s also critical to look at your existing processes and strategies and find ways to fine-tune them before the holiday season is in full swing.

Tips for Streamlining Shipping Processes

There are many moving parts during the holiday season, and retailers are charged with ensuring all processes are seamless. A process that doesn’t work well could throw everything out of balance and result in unhappy customers. Following are some ideas to consider.

Set proper expectations. Over-delivering on customer expectations is the best action that you can take during the holidays. Nothing delights customers more than having a Christmas gift they ordered for a family member delivered sooner than expected. Pay attention to ship-by dates, and add a little buffer to ensure that customers are happy.

Ship packages fast. The holiday season is all about reacting fast to orders. Aim to ship orders within 12 hours of receiving them for maximum results. The quicker an item is readied, the faster you can get it on a truck and onto the customer’s doorstep.

Schedule frequent package pickups with carriers. Since volume increases during the holiday season, it’s helpful to schedule more frequent package pickups. Doing so ensures that you have a consistent stream of packages going out and less delay between the time a customer places an order and receives the item.

Extend shipping cutoff dates as late as possible. It’s wise to create a small cushion in shipping estimates to plan for the unexpected. But this must also be balanced with meeting customers’ last-minute needs. It’s important to note that last year two of the top 10 buying days of the holiday season occurred within a week of Christmas. In fact, the final week before Christmas accounted for 12 percent of online visits and 14 percent of transactions during the holiday season. Extending shipping cutoff dates as late as possible ensures that you don’t leave that last-minute shopping revenue on the table.

Pay special attention to the packing of packages. A damaged package is a surprise that no customer wants during the holidays. Reduce the risk of damaged packages by ensuring that boxes are strong and plenty of packing material is used. There should be at least two inches of room between the product and the outer shell of the box to minimize the risk of damage.

Mark your calendar to look at your shipping process annually. Even a shipping process that appears to be in good condition can often benefit from a few tweaks. By continually evaluating your process, you can maximize efficiency to ensure a better experience for the customer.

Meeting FedEx Deadlines with Greater Success

Shoppers are rushing during the holiday season to meet deadlines and expectations as well as create a wonderful holiday experience for their family and loved ones. One piece of the puzzle is shopping for just the right gift. And when they find it, that’s only the beginning of the process. The customer then hands the reins over to the retailer so they can deliver the package in time for the customer to deliver the gift to the recipient. A critical piece of that puzzle is shipping.

When a package arrives later than expected, customers rarely blame the carrier; they are instead upset with the retailer. This shifts the responsibility to ensure that without a doubt, whether you use UPS or FedEx, the package is delivered on time..

About Shipware

Shipware delivers volume parcel and less-than-truckload shippers intelligent and innovative distribution solutions and strategies. Whether you ship with FedEx, UPS, USPS or regional carriers, our invoice audit and negotiation services are guaranteed to reduce your parcel and LTL shipping costs by 10 to 30 percent, with no disruption of current operations. Our team of experts has more than 200 years of carrier pricing experience. We have negotiated thousands of FedEx, UPS and LTL contracts – saving our clients an average of 19 percent.