FDX FedEx Corp

By Paul Ziobro 

FedEx Corp. and United Parcel Service Inc. are escalating their war on bulky items by levying $24 fees on packages weighing more than 50 pounds.

Previously, packages weighing more than 70 pounds triggered additional handling surcharges. But the carriers are lowering their thresholds as part of an annual round of rate increases that could cause millions of packages to be hit by the fee -- or force customers to change their shipping practices to avoid it.

The number of packages affected by the change could be significant. Neither company responded to questions about the estimated revenue the new fees would generate, but Shipware LLC, a shipping consulting firm, estimates that 14.5% of packages sent by its 100 largest shipper clients would be hit by the $24 fee under the new rules, up from 8.4%.

"The impact is alarming," said Trevor Outman, Shipware's founder and co-chief executive. "For some, the cost increase will be in the millions [of dollars]. For others, it will be hundreds of thousands."

Boxed Wholesale, an online startup that sells batteries, laundry detergent and water in bulk, aims to ship orders in as few boxes as possible and currently avoids shipments anywhere near 70 pounds. The new weight limits could mean that Boxed will split up orders more often.

"Customers who get their order in one box may now get it in two," said Joe Bobko, Boxed's vice president of transportation. Multiple boxes means higher costs for shipping, labor and packaging, according to Mr. Bobko, and increases the odds that the customer may not get their whole order at the same time.

The pricing changes may also mean carriers must make additional stops at individual homes, which is why Mr. Bobko has been meeting with UPS, its carrier, to try to minimize the impact. He said the two sides "have reached an agreement that is favorable to both parties."

While shipments with multiple items could get split up to avoid the fee, others could be stuck. John Haber, CEO of Spend Management Experts Inc., another shipping consulting firm, said some examples of products weighing between 50 and 70 pounds include dog food, lounge chairs, exercise equipment, home theater systems, mini dirt bikes and medical devices.

"It's massive for certain shippers," Mr. Haber said.

FedEx and UPS say the changes to the threshold are being made so that they are properly compensated for the increasing number of large and heavy packages that are moving through their networks as things like televisions, furniture and auto parts are increasingly ordered online. Often, those bigger packages don't easily move through automated facilities increasingly designed for e-commerce packages, which are typically lighter and smaller, and can require additional handling.

"These changes will ensure that we continue to provide the level of service that our customers expect while responsibly managing capacity through our network," a FedEx spokeswoman said.

The changes went into effect at UPS on Dec. 29. FedEx's new rates start Jan. 6.

The changes were announced in recent weeks as part of the annual rate increases carriers impose on shippers. As in years past, FedEx and UPS said prices, spread across various weights and distances, will rise 4.9% on average.

Mr. Outman estimated that a 50-pound parcel shipped over 1,000 miles using UPS Ground service could cost more than $75 to ship under the new rates, compared with about $48 under previous rates. That example applies to the carrier's list prices, so the impact could be lower based on negotiated prices.

Boxed's Mr. Bobko said he understands carriers wanting packages that are easier to handle but that he doesn't think assigning an arbitrary weight limit works in all cases.

"A poorly packed 40-pound package may be more difficult for the carrier to handle than a well-packed 69-pound package," he said.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

December 30, 2019 08:49 ET (13:49 GMT)

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