FedEx plans to increase shipping rates by an average of 6.9% from January as it copes with weaker business demand.
“As of January 2, 2023, rates for FedEx Express, FedEx Ground and FedEx Home Delivery will increase by an average of 6.9%,” the company said in a press release. pronunciation on Thursday. “FedEx freight rates will increase by an average of 6.9%-7.9%, depending on the customer’s freight rate scale.”
The rate increase comes after the shipping companyit has seen a downturn in its global parcel delivery business. FedEx plans to close some storefronts and corporate offices and impose a staff freeze to cut costs during the delay. During a conference call on Thursday to discuss financial results, FedEx executives pointed to rising inflation as one of the issues.
“What we didn’t expect, to be quite honest, was the massive cost inflation that hit us massively last year. And that’s what really hit us,” said CEO Raj Subramaniam during the phone call.
He added that the company is now “focusing on the things we can control,” such as improving margins and return on investment.
The cost of an overnight delivery via FedEx before 8 a.m. the next day for a 1 pound envelope rises to $68.04, or a 4.4% increase. The cost of two-day delivery before 10:30 a.m. for a 1-pound envelope increases by 7.9% to $25.37 (see .) here for a list of FedEx’s new rates).
Rival shippers are also raising rates as they grapple with inflation, driving up the cost of fuel and wages. The US Postal Service said last month that it was astarting in October, citing higher gas and labor costs since a year earlier.
USPS said the rate increases will depend on the size of a package and the distance it will travel. For example, a consumer who sends a Priority Mail package that weighs more than 26 pounds will be charged a $6.45 surcharge to ship it nationwide, according to the USPS.