FedEx has announced plans to increase shipping rates starting in January as it struggles with weaker business demands.
“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 released 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 increase follows the shipping company’s announcement that it has seen a decrease in its global package delivery business.
FedEx also plans to shutter some of its storefronts and corporate offices. It will also place a hiring freeze to tighten costs during the slowdown. On a Thursday conference call to discuss financial results, FedEx executives noted surging inflation as a critical issue.
“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 FedEx is now “focusing on the things we have control” over, including improving margins and return on investment.
The cost of overnight delivery using FedEx with delivery scheduled by 8 a.m. the next day for a 1-pound envelope will soon cost $68.04. The cost of two-day delivery by 10:30 a.m. for a 1-pound envelope will increase to $25.37.
Rival shippers are also increasing their rates as they continue to grapple with inflation, which has increased fuel costs and wages. The U.S. Postal Service has also announced that it would add a peak season rate starting next month, citing the higher cost of gas and labor, CBS News reported.
USPS said the rates would depend on the size of a package and the distance of travel. For example, a consumer sending out a Priority Mail package that weighs more than 26 pounds will pay an additional charge of $6.45 to send it across the country, the USPS said.