Spend Matters welcomes another guest post from Jim Haller of NPI, a spend management consultancy focused on eliminating overspending on IT, telecom, and shipping.
For the second time in nine months, FedEx Freight, a subsidiary of FedEx Corp., has announced they are increasing rates by an average of 3.9% effective March 31, 2014. This announcement comes as many FedEx Freight customers are still adjusting to the 4.5% increase that went into effect on July 1, 2013. It also underscores the challenges shippers are experiencing as they try to reduce shipping costs amid pressure to offer free and/or expedited shipping to their customers.
According to their announcement:
“This rate change applies to eligible FedEx Freight® shipments within the U.S. (including Alaska, Hawaii, Puerto Rico and the U.S. Virgin Islands), between the contiguous U.S. and Canada, within Canada, between the contiguous U.S. and Mexico, and within Mexico.
This rate change for FedEx Freight applies to shipments covered by the FXF 1000, FXF 501 and other related series base rates. Additional changes will include absolute minimum charges and accessorial rates and charges. The FedEx Freight fuel surcharge will remain unchanged and is one of the lowest in the LTL industry.”
There will also be changes to base rates, rules tariff, and accessorial charges, which will be made available at fedex.com on March 31, 2014.
Mid-year rate increases and service changes appear to be on the rise for transportation. One factor is that carriers are still adjusting to the impact of 2013 changes to the U.S. hours-of-service (HOS) rules for truck drivers. With reduced weekly driving time for some truckers, many carriers are experiencing higher labor costs, lower productivity, and slower delivery of goods across the supply chain. Some of these higher operating costs are being passed on to shippers.
Some shippers will be insulated from mid-year rate increases by their contract terms, but many will not. For the latter, a complete spend management assessment is one more tool shippers can use to identify ways to offset increases.