ShipRx

FedEx volume down, but revenue per package increased - ShipRx
Blog / Dynamic pricing: the secret to FedEx’s $150 million profit
2 minutes read

Dynamic pricing: the secret to FedEx's $150 million profit

As UPS makes headlines thanks to a looming strike, FedEx is (finally) getting some good publicity. When FedEx’s stock dropped 21% in a single day last year, onlookers wondered whether the carrier would bounce back. After its Q3 earnings call on March 16, the answer is clear— FedEx is bouncing back, and its future looks bright.

How did the carrier pull off such a dramatic turnaround? What does this mean for current customers? And is now a good time to switch to FedEx if you’re using UPS? This post will give you a glimpse into FedEx’s strategy and how to make it work for you and your business.

The Fiscal Year 2023 Q3 report

In the earnings presentation, the carrier shared that it has mitigated 45% of its total revenue declines on an adjusted basis by reducing flights, salaries, and benefits expenses.

Has service faltered? Aside from suspending Sunday deliveries in specific locations, it doesn’t appear so. FedEx Ground is back to pre-pandemic service levels with an average delivery time of two days within the US. It’s also enhancing the customer experience by adding innovations like picture proof of delivery.

The average daily package volume for FedEx Express and Ground both experienced declines (-14% and -11%, respectively), proving a sentiment expressed by FedEx Chief Executive Raj Subramaniam last year, “The main macro issue in the United States is the e-commerce reset. E-commerce now makes up 18% or 19% of all retail sales in the country, down from a peak of 22% during the pandemic. It was 16% before the pandemic.” Despite these challenges, FedEx Ground and Freight experienced an 11% revenue increase per package and shipment.

An increase in revenue despite a decline in volume?

In the earnings call, FedEx attributed a profit of $150 million to its dynamic pricing infrastructure. This strategy “enabled holiday peak residential surcharges to adjust dynamically based on individual customers’ weekly peaking factor.” The same technology that allowed the carrier to identify times when it overbilled customers will be used to manage customer performance and contract compliance to increase its revenue.

What does this technology mean for existing customers?

While FedEx has the technology to know whether they’ve overcharged a customer or should adjust the invoice based on failing to uphold its service guarantee, those refunds aren’t automatic. That’s where ShipRx’s parcel audit software comes in. Our software automatically identifies incorrect charges and service failures, our team handles disputes with the carrier, and your refund is directly credited to your bill.

Does it work? Don’t take our word for it. Here’s what a customer said about our parcel audit service, “We were already using another audit company when we were referred to ShipRx. Switching to their platform more than doubled our monthly recovery.”

Is now a good time to switch to FedEx?

As carriers experience a decline in shipping volumes, there’s no better time to switch carriers or renegotiate your current contract. Let us help you with your FedEx contract negotiations to ensure the best rates.

Todd
Todd Partner
2 Minute Read

UPS and FedEx surcharges coming to an urban center near you

Attention shippers! If you send parcels to addresses in Boston, Chicago, New York, Los Angeles, or San Francisco, you may be surprised by additional fees on your next bill. UPS and FedEx announced new delivery area surcharges (DAS) for
Jim
James Founding Partner
2 Minute Read

UPS to replace FedEx as USPS primary air cargo carrier

Although FedEx broke the news on April 1, the end of their 20-year partnership with the United States Postal Service was no April Fool’s Joke. According to the FedEx press release, after concluding extensive discussions, USPS and FedEx opted
brittany
Brittany ShipRx Contributor
2 Minute Read

FedEx exceeds analysts expectations with Q3 earnings report

While most of us are enjoying spring and making plans for Q2, FedEx is living in the future—financially, at least. On March 21, 2024, the carrier released its Q3 2024 earnings, which exceeded analysts’ expectations and sent the price
Todd
Todd Partner

Save On Your Parcel Costs Today

Get a full-scale analysis of your business and ShipRX exclusive recommended solutions to increase your profits.

Cost Saving Services

Request Your Free Savings Report.

Fill out the form below, and we’ll call you within 24 hours. In a rush? Call now (844) 774-4779

Pop Up Form

  • This field is for validation purposes and should be left unchanged.