Fedex to Deliver New Prices Based on Weight, Distance

MEMPHIS —  Federal Express Corp. said it will adjust its U.S. express delivery prices for distance and weight, matching last year’s move by Atlanta-based rival United Parcel Service of America Inc.

The cost of delivering a 2-pound package overnight from New York to San Francisco, for example, will rise about 13% on July 1, while the price for the same service to Philadelphia will drop about 22%, Federal Express said.

The pricing reflects the increased competition between Memphis-based Federal Express and UPS, one analyst said.

“They’re going head to head with each other,” said Jeffrey Pittsburg, an analyst at Goldis-Pittsburg Institutional Services in Garden City, N.Y. “And maybe it’ll help [Federal Express’] profit margins.”

Shares in Federal Express closed up 50 cents at an all-time high of $48.625 on the New York Stock Exchange.

Federal Express’ move follows UPS’ switch to distance-based pricing for air delivery service. That cut UPS prices for short-distance air deliveries as much as 40%, while increasing prices for longer-distance service as much as 28%.

The July price changes will extend the benefits of distance and weight adjustments to smaller customers, said Mike Glenn, a Federal Express senior vice president.

Software introduced in January 1995 made such automated-pricing systems available to larger customers, Glenn said. “Now we can automate any shipment,” he said.

Glenn couldn’t say how pricing changes are expected to affect domestic prices and business overall.

For packages weighing 25 pounds or more, overnight delivery from New York to San Francisco will cost about 5% more, whereas prices for the same service to Philadelphia will drop 46%, the company said.