FedEx will raise its shipping rates starting in January
FedEx plans to increase shipping rates by an average of 6.9% starting in January as it copes with weaker business demand.
"Effective January 2, 2023, FedEx Express, FedEx Ground and FedEx Home Delivery rates will increase by an average of 6.9%," the company said in a statement on Thursday. "FedEx Freight rates will increase by an average of 6.9%-7.9% dependent on the customer's transportation rate scale."
The rate hike comes after the shipping company warned last week it has seen a drop-off in its global package delivery business. FedEx plans to shutter some storefronts and corporate offices and institute a hiring freeze to tighten costs amid the slowdown. On a Thursday conference call to discuss financial results, FedEx executives pointed to surging inflation as one of its woes.
"What we did not anticipate, to be perfectly honest with you, was the tremendous inflation of costs that hit us squarely last year. And that was what really got us," CEO Raj Subramaniam said on the call.
He added that the company is now "focusing on the things we have control" over, such as improving margins and return on investment.
The cost of overnight delivery via FedEx by 8 a.m. the next day for a 1-pound envelope will rise to $68.04, or an increase of 4.4%. The cost of two-day delivery by 10:30 a.m. for a 1-pound envelope will rise 7.9% to $25.37 (see here for a list of FedEx's new rates).
Rival shippers are also increasing rates as they wrestle with inflation, which has pushed up the costs of fuel and wages. The U.S. Postal Service said last month that it would add a peak season rate starting in October, citing the higher cost of gas and labor since a year earlier.
USPS said the rate hikes will depend on the size of a package and the distance it will travel. For instance, a consumer shipping a Priority Mail package that weighs more than 26 pounds will face an additional charge of $6.45 to send it across the country, the USPS said.