Almost everywhere you look these days, a business is increasing its prices. Last week, FedEx announced it would join those ranks, upping its shipping rates for FedEx Express, FedEx Group, and FedEx Freight. The change comes just two months after the company reported its fourth-quarter earnings, noting it had seen momentum across the business, and was becoming a "more flexible, efficient and data-driven organization." Read on to learn more about why FedEx is making customers pay more, and what you should be prepared for the next time you have to make a shipment.
RELATED: USPS Is Making These Changes to Your Mail, Starting Sept. 19.
Most FedEx rates will increase by 5.9 percent.
Shutterstock / RusticallyStarting on Jan. 1, 2024, FedEx shipping rates will increase by an average of 5.9 percent, including FedEx Express, FedEx Ground, and FedEx Home Delivery. FedEx Freight rates will increase an average of 5.9 to 6.9 percent. FedEx Ground Economy rates will also see a bump, though the company didn't say by how much.
FedEx said this average rate increase was one percentage point lower than the average rate increase the company made last year (in 2023, it bumped rates an average of 6.9 percent).
"The price adjustments reflect incremental costs associated with the current operating environment while enabling FedEx to continue investing in service enhancement, fleet maintenance, technology innovations, and other areas to serve customers more effectively and efficiently," the company said in the announcement.
Currently, you can ship a 9.5-inch by 12.5-inch flat-rate envelope at FedEx for $11.11—that price would increase to $11.75 in 2024.
RELATED: 6 Warnings to Customers From Former FedEx Employees.
Two changes will impact international shipments.
ShutterstockIn addition to its basic rate increase, FedEx announced that on Jan. 1, it would increase customs clearance service fees on imports, though it didn't say by how much. And on Jan. 15, it will start charging the Additional Handling Surcharge and Oversize Charge per package for international multi-piece shipments.
FedEx had previously only charged those fees once per multi-piece shipment, but now, each individual piece will be charged. As of Sept. 7, the company has updated its website with a full rundown of how much more you'll be paying.
RELATED: "No End in Sight" to USPS Price Hikes, Former Treasurer Warns.
FedEx is preparing for big troubles ahead.
![New York, New York, USA - March 13, 2013: A parked FedEx Express truck in midtown Manhattan in front of a Fedex Office store in the afternoon. FedEx is one of the leading package delivery services offering many different delivery options. Fedex Office stores act as a shipping depot as well as office supply and service stores. People can be seen on the street. [url=/my_lightbox_contents.php?lightboxID=3623142]Click here for more[/url] New York images and video.](https://bestlifeonline.com/media-library/new-york-new-york-usa-march-13-2013-a-parked-fedex-express-truck-in-midtown-manhattan-in-front-of-a-fedex-office-store-in.jpg?id=53457256&width=980)
iStockFedEx most recently reported stronger-than-expected earnings on June 20, 2023, although revenue was down 10 percent year-over-year. Its leadership said the results were negatively impacted by lower demand and cost inflation.
On an earnings call, Rajesh Subramaniam, FedEx CEO, explained the efforts the company was making to decrease costs and boost revenue. It cut 29,000 jobs in fiscal year 2023, retired 18 planes, reduced total flight hours by 12 percent year-over-year, and closed some offices. This fiscal year, it plans to reduce costs by about $1.8 billion; in fiscal year 2025, its goal is to cut at least $4 billion.
However, future predictions aren't rosy.
"In a demand environment that remains consistent with what we are currently experiencing, we anticipate flattish revenue for the full year," said FedEx CFO Michael Lenz on the call.
It's not the only shipping service that's struggling.
iStockOther shipping services have also increased rates recently. On July 9, the U.S. Postal Service (USPS) announced a three-cent increase in the cost of a First-Class Mail Forever stamp—raising the price per stamp from 63 cents to 66 cents. In a press release, the USPS said the increase was necessary due to inflation.
And in an August 8 quarterly earnings report, the United Parcel Service (UPS) also reported lower revenue: just $22.1 billion compared to $24.8 billion last year, a 10 percent decrease. In its U.S. segment, UPS cited a 6.9 percent decrease in revenue driven by a 9.9 percent decrease in average daily volume.
As shipping needs decrease across the board, those who do need the service will bear the brunt of it.
