FedEx mulls peak-pricing charges as e-commerce spurs deliveries

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FedEx Corp. is studying whether to charge customers more during the busiest shipping periods, aiming to profit even more from the surge in online shopping.

The courier is evaluating several options for peak pricing and may also charge more for oversize items, Executive Vice President Rajesh Subramaniam told investors and analysts Tuesday. FedEx’s biggest rival, United Parcel Service Inc., said this week it will impose surcharges on deliveries during the holiday shopping rush in November and December.

“We are focused on ensuring that we are compensated for the investments we make to deliver outstanding service during peak,” Subramaniam said. “We continue to consider additional peak pricing changes but have not made a final decision in this regard.”
Price increases around Black Friday and Christmas would give FedEx’s earnings an additional boost at a time when the company is already benefiting from a recent jump in shipping rates and package volumes. Profit will climb as much as 14 percent in the current fiscal year, FedEx said Tuesday.

The outlook underscored the potential payoff from FedEx’s heavy investments in fiscal 2017 to handle rising demand from the expansion of e-commerce. The air-freight pioneer, an economic bellwether because of the variety of shipments it carries, is also poised to gain from a stronger worldwide growth.

Bloomberg News