FedEx rolls out a new pricing structure for parcel pickups set to take effect in August

Memphis-based global freight transportation and logistics services provider FedEx recently announced it is rolling out a new pricing structure for parcel pickups, which will go into effect on August 18.

“Large and small customers alike have expressed their overwhelming preference for a single pickup experience, and now with one FedEx and Network 2.0—our long-term plan to streamline package pickups and deliveries with one van, one neighborhood—underway, we are able to make that happen,” a FedEx spokesperson said. “The updated pricing structure will streamline the process for both FedEx Ground and Express pickups in the U.S. and Canada into a unified model.”

FedEx said that this new pricing and rating structure is for parcel pickups in the United States and Canada. And it added that this new rating structure will charge weekly for regularly scheduled (U.S. and Canada) and automated pickups (U.S. only), regardless of service type—whether it is FedEx expedited or standard service—with on-call pickups in the U.S. charged per stop.

A key driver for this shift, according to FedEx, is due to customers having expressed an overwhelming preference for a single pickup.

“So, as Network 2.0 continues to do a phased roll out of a single pickup experience to customers across the U.S. through Streamlined Pickup and Delivery, a rationalized rating structure is a necessary step to ensure a seamless customer pickup experience,” the company said. “This allows FedEx to be more agile and flexible in meeting customer pickup needs.”

Regular weekly pickup service fees for Monday through Friday will range from: 1 day, $7.50; 2 days, $15.00; 3 days, $22.00; 4 days, $29.00; 5 days, $35.50, and Saturday and Sunday, $12 per day. For Automated pickup, the flat weekly fee is $19.00 per week Monday through Friday and $7.95 per day Saturday and Sunday. On-call pickup service fees for FedEx Future Day On-call Pickup, from Monday through Friday range from $9.00 to $16.25 per stop Monday-Friday and from $15.50 to $22.75 per stop on Saturday and Sunday, with On-Call pickup fees ranging from $9.00 to $22.75 per stop, depending on day of week and service type.

Adi Karamcheti, Consultant, Professional Services at San Diego-based Shipware and a former FedEx sales and pricing executive, said that the one driver pick up has been a pain point going back to 2001, after FedEx acquired RPS, and started their ground service.

“Two pickups have always been a major disadvantage for FedEx in their eternal fight with UPS,” he explained. “Them finally getting to a single pick up is a big deal. It will make it easier for their sales folks, and will remove one of the frequent objections they have to handle. Those three pick up options, Regular pickup, Automated pickup and On-Call pickup, are interesting. The pricing around the On-Call pickups is sure to confuse people. It varies quite a bit and is very expensive. I think they'll get push back on this from customers used to calling in or requesting online pickups who do not have regularly scheduled pickups.” 

And Mike Erickson, president of Portland, Ore.-based  parcel consultancy AFMS said that a lot of this announcement benefits both FedEx and as well as shippers.

“FedEx was at a disadvantage vs UPS, since UPS always had a single network versus two separate ones for FedEx Ground and Air, so it makes sense,” said Erickson. “Picking up multiple packages in a single stop is always preferable. Keep in mind that many times both pickup and delivery are completed at the same time, especially if a customer tells the driver that all the packages are ready to be picked up. So, consolidating all packages at the same time will save the customer money by eliminating a per package fee versus a single fee. Customers will encourage their folks in the shipping department to make sure they get stuff ready at the same time eliminating an extra pickup fee, plus a day definite option is great for infrequent shippers. All in all, FedEx matches UPS for the most part with structure. It provides flexibility and promotes pickup density and the single network 2.0. This definitely will help smaller shippers versus larger shippers who have carrier-provided trailers parked on their docks.” 

Robert Persuit, Senior Director of Business Development for Warrendale, Pa.-based  ShipMatrix noted that these changes look to resolve differences in how pickups are charged in a blended FedEx 2.0 network.

“There are so many parameters to pickup fees (service type, request method, Day of Week, package count, etc.),” said Persuit. “FedEx has had different PU pricing fee structures since it acquired RPS in 1997. Those structures were radically different and were okay to maintain while the companies operated independently, but a combined Operation becomes illogical. A customer with 100 Ground pkgs/day is charged a weekly fee, but a shipper with five Express packages per day, saw no charge. This change addresses those types of inconsistencies. Additionally, the change seeks to eliminate empty pickup stops as much as possible. FedEx shares some of the cost savings by offering lower weekly pickup charges for fewer pickup days per week.

FedEx’s Network 2.0 is part of a significant shift at FedEx, which began in April 2023, when it announced that, effective June 2024, it would consolidate all of its operating companies into a single organization. As previously reported by LM, FedEx described this consolidation as a phased transition that will subsequently bring nearly all of its operating companies—FedEx Express, FedEx Ground, FedEx Services, as well as other FedEx operating companies—into Federal Express Corporation, and transition into what it called a single company operating a unified, fully integrated air-ground network. And it also noted that its less-than-truckload subsidiary, FedEx Freight, will remain as a standalone operation within Federal Express Corporation.  

FedEx said that this consolidation will play a key role in facilitating the company’s DRIVE initiative, which includes Network 2.0, a years-long effort focusing on the operational efficiency, in which the company picks up, transports, and delivers packages in the U.S. and Canada.

On the company’s fiscal fourth quarter earnings call last week, FedEx President & CEO Raj Subramaniam said that the company is pleased with how the Network 2.0 rollout is going, noting it is moving at what he called “a thoughtful and calculated pace,” with the company maintaining solid service levels and seeing a 10% reduction in pickup and delivery costs.