FedEx Raises Rates

Zacks

FedEx Freight – an affiliate of global delivery service provider FedEx Corp. (FDX) – has increased its shipping rates for certain regions. The rates have been hiked by an average of 4.5%, effective Jul 1, 2013.

The higher rates will be applicable on FedEx Freight shipments within the U.S. covering Alaska, Hawaii, Puerto Rico and the U.S. Virgin Islands. The rates are also relevant for consignments between places adjacent to the U.S. and Canada, within Canada, between the neighboring U.S. and Mexico, and within Mexico.

All shipment rates under FXF 1000, FXF 501 and other related series base will be revised, with the FedEx Freight fuel surcharge remaining the same. All information regarding new base rates, rules tariff and accessorial charges for FedEx Freight will be displayed at fedex.com.

Last year, the company increased its shipping rates for ground and home delivery by an average of 4.9%. These rates were effective from Jan 7, 2013.

We believe that the rate hikes will act as a growth driver for the company, leading toward high profitability. With a jump in the rates, FedEx will be able to generate higher revenues and achieve the set target of $1.6 billion in incremental profit at its Express division by the end of 2016.

Along with this initiative, FedEx is working on a number of strategies to expand its services across the U.S., Canada and Mexico and capitalize on business opportunities. The company extended its air cargo delivery contract with the U.S. Postal Service for the next seven years.

FedEx – which entered into a contract with United Continental Holdings Inc. (UAL) to buy 30 The Boeing Company’s (BA) 757 passenger airplanes – currently retains a Zacks Rank #3 (Hold).

On a similar note, leading cargo carrier United Parcel Service Inc. (UPS) increased its freight rates by 5.9% on non-contractual shipments in the U.S., Canada and Mexico. The increase is levied on less-than-truckload (LTL) and truckload (:TL) rates, and other ancillary charges.
 

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