FedEx to increase shipping rates by 6.9% in it’s against slowdown

FedEx Corp. said it plans to raise shipping rates by an average of 6.9% across most of its services starting in January 2023, as the delivery mogul copes with a global business slowdown.

The rate increase is higher than in previous years and comes days after the firm slashed its sales and profit forecasts. FedEx and rival United Parcel Services Inc. raised shipping rates by an average of 5.9% for 2022—the first time in eight years that either had strayed above 4.9%.

Inflation in the US has been soaring near four-decade highs. Energy prices have declined in recent weeks, though they are still above their levels a year ago. FedEx offsets some of those costs with fuel surcharges.

The firm is raising rates as it and other carriers are suddenly stuck with excess capacity. Ocean freight rates have dropped massively during what is typically the industry’s peak season after cargo owners shipped holiday goods early and inflation-stricken consumer demand.

The firm’s rate move was announced as part of its first-quarter earnings report, which showed profit dropped 20% from 2021 and that FedEx was planning additional cost cuts. The firm said it expects to generate between $2.2 billion- $2.7 billion in savings this fiscal year from a plan announced last week to park aircraft, close some offices, and suspend Sunday deliveries. The firm also plans to squeeze an additional $4 billion in annual costs from its operations over the next two years.