FedEx Raising Rates for Many Services as It Shifts Focus to Overseas Expansion
FedEx Corp. said Wednesday that it would raise rates for many of its services as it laid out a long-term growth strategy focused on overseas markets, new technology and expanding its FedEx/Kinko’s retail chain.
FedEx said it would increase rates on its FedEx Express service by an average of 3.5%, effective Jan. 2. Standard list rates will go up 5.5%, offset by a decrease in an overall fuel surcharge of 2 percentage points.
FedEx said it also would raise delivery surcharges for some postal codes and for certain residential and Saturday deliveries.
It also will introduce new retail counter rates for its FedEx Express and FedEx Ground services Nov. 7 and announce higher rates for its FedEx Ground and FedEx Home Delivery services later this year.
The increase in FedEx’s ground service rates probably will come after rival United Parcel Service Inc. details its pricing, analyst Jordan Alliger of Deutsche Bank Securities wrote.
In December, FedEx will update its surcharge index, which is based on jet fuel prices posted by the Energy Department. The current fuel surcharge of 15.5%, updated on the first Monday of each month, is in effect through Nov. 6.
Last month, UPS said it would raise the cap on its fuel surcharge for air shipping to 12.5% from 9.5%. The increase took effect this week. UPS left a ground services surcharge unchanged at 3%.
Memphis, Tenn.-based FedEx made the rate announcement to precede a meeting with Wall Street analysts in New York. At the meeting, FedEx executives said they were committed to achieving double-digit profit margins, 10% annual revenue growth and 10% to 15% annual growth in earnings per share. FedEx also reaffirmed its September forecast for fiscal second-quarter earnings.
The company plans to expand its range of office supplies at FedEx/Kinko retail outlets by 2,500 items and is adding services to complement shipping.
FedEx plans 1,000 international FedEx/Kinko’s outlets by 2011, half in Asia, division chief Gary Kusin said.
FedEx shares rose 2 cents to $85.61.
