From Nov. 2 to Jan. 17, regular shipments to residences will face a surcharge of $1 to $5, the company announced on its web site Tuesday. United Parcel Service (UPS) - Get Report and the U.S. Postal Service also have imposed holiday fees. This is the first time FedEx has done so since 2016.
The coronavirus pandemic has sent online purchases, and hence package deliveries, soaring.
“As the impact of the virus continues to generate a surge in residential deliveries, we are entering this holiday peak season with extremely high demand for capacity and are experiencing increased operating costs across our network,” FedEx said.
“We anticipate residential volume to continue to surge into the new year. To continue providing our customers with the best possible service during this challenging time, we are implementing … surcharges and fees.”
Morningstar analyst Matthew Young has mixed views on the company.
“FedEx is grappling with a handful of near-term headwinds, including hefty network investment at ground targeting the rapid growth of business-to-consumer deliveries, sluggish U.S. and European industrial end markets, the pullback in global trade, and lost revenue from its intentional breakup with Amazon as a customer,” he wrote in a commentary last month.
“However, FedEx longer-term growth prospects haven’t evaporated. Its extensive international shipping network is extraordinarily difficult and costly to duplicate, global trade will eventually improve, and domestic/international e-commerce tailwinds should remain favorable for years to come.”
FedEx recently traded at $206.93, up 0.14%, and has jumped 37% so far this year.