How will FedEx get back on track?

Our last blog post described how FedEx planned to implement cost savings in broad strokes. Now, they’ve announced their Fiscal 2023 Cost Reduction Initiatives. This plan includes the following:

• Reducing the costs of FedEx Express by $1.5 – 1.7 billion by decreasing flight frequencies and parking aircraft temporarily
• Reducing the costs of FedEx ground by $300 – 500 million by suspending some Sunday services, decreasing linehaul expenses, and closing some sort operations
• Lowering total costs by $300 – 500 million by reducing vendor utilization, closing some Office and corporate locations, and deferring some projects.
• Generating $4 billion of company-wide cost savings by cutting operating and overhead expenses
• Increasing rates beginning January 3, 2023

With these methods in place, FedEx’s executive vice president and chief financial officer, Michael C. Lenz, says, “I am confident the cost actions we’re implementing with urgency will enhance efficiency and drive improved profitability in support of our long-term financial targets.”

FedEx is raising prices: here’s what that means for you

The first four bullet points above may not affect you at all. However, everyone will feel the effects of increased rates. Beginning January 3, 2023, rates are going up for all FedEx customers.

Customers using FedEx Express, FedEx Ground, and FedEx Home Delivery will see an average increase of 6.9%. FedEx Freight rates, dependent on the customer’s transportation rate scale, will increase by 6.9 – 7.9%.

In addition to rate increases, customers can expect an increase in surcharges and fees. These include a $13.25 per package fee for parcels sent to zip codes deemed remote (beginning January 30, 2023) and an 8% fee for late payments on US FedEx Express and FedEx Ground services, among many other increased surcharges starting January 2, 2023.

How can you battle rising costs when shipping parcels?

As FedEx moves ahead with a plan designed to protect its business, how can you protect yours? Soften the blow of rate increases by ensuring you aren’t paying too much for shipping services, and guaranteeing that you’re getting the refunds you deserve when FedEx doesn’t deliver your parcels as guaranteed.

ShipRx helps companies save money on shipping through parcel rate negotiation and parcel audit services. Getting started is free— you only pay when you start saving money. Get in touch today and find out how you can save on shipping before the rate increases go into place.

James Founding Partner