FedEx doubles down on premium e-commerce, delivery surcharges

“We love a return as it shows up in our network as a profitable B2B move,” allowing the carrier to build route density back to a retailer’s distribution center, the revenue chief said.

Surcharges

Carere made clear that FedEx will no longer subsidize e-commerce shipments simply to lower operating cost through better density. Instead, retailers must pay for the true value of FedEx’s infrastructure investments and premium service. Surcharges, she said, are a key part of the revenue strategy and will increasingly be exported to the company’s international operations.

“To make money in e-commerce, you have to account for the incremental cost,” Carere said. FedEx, for example, should be properly compensated for leasing extra equipment, adding part-time workers and utilizing more commercial partners during the busy holiday season to make sure retailers get merchandise to stores and customers’ homes without experiencing delays from the surge in demand.

“Peak surcharges are a win-win. It’ll let them sell at Christmas and it allows us to bring on the resources profitably to do that,” FedEx’s top sales executive said.

Major parcel carriers have applied peak-season surcharges for many years, but some industry watchers have questioned the pricing strategy as a revenue grab at a time when volume growth during recent peak seasons has slowed and companies rationalize their networks for better efficiency.

Extra fees for parcel shipping were the main contributor to higher-than-expected rates during the fourth quarter last year and rates are expected to rise again in 2026, according to AFS Logistics and TD Cowen investment bank. Their report pointed out how FedEx and UPS introduced a blanket demand surcharge for residential delivery despite forecasts for muted growth. The blanket policy represents a major shift from previous demand charges that more precisely targeted delivery costs like volume surges, large packages and additional handling requirements.

FedEx also applies surcharges to large, heavy, hard-to-handle deliveries over 50 pounds, which are very profitable packages, according to the company. Under a 2025 agreement, FedEx is delivering large packages for Amazon to certain areas.

Analysts say the widespread use of add-on fees risks driving retailers to cheaper, alternative carriers. Rather than seeing that as a problem, FedEx is actively conceding lightweight, low-margin parcel shipments to competitors.

“The most important structural change is that we are really adjusting our pricing strategy to cover all costs to make sure that we’re getting paid for our differentiation. And what’s exciting is what we’ve learned here in the United States, we’re taking to Europe. We’ve taken to Asia. We no longer constrain ourselves to just peak surcharges at Christmas. We have to adjust when we’ve got capacity,” Carere said.

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