Rate increases announced by FedEx for 2023 are the largest in history, says John Haber, chief strategy officer at Transportation Insight. Shippers and consumers need to prepare now.
Aside from the average rate increase FedEx that announced for the last week of December, 2022 and into 2023, there are more than 20 surcharges that are sending rate increases into double digits. “When you combine those increases with the almost 7% general rate increase, you're looking at massive increases for both shippers and consumers,” says Haber. “And shippers are going to pass those on to the consumer.”
However, there is some time to prepare for the rate hikes, he says. “In order to develop your budget for 2023, you have time to renegotiate and look at different options,” Haber says. “There's time right now to plan ahead and try and offset and mitigate some of these substantial increases. If you wait until next year, it's too late.”
Of course, FedEx isn’t the only provider boosting rates. UPS was preparing to announce its own increases, and the U.S. Postal Service had already done so, although Haber calls the latter’s hikes “much less problematic” for shippers.
This won’t be the end of increases, Haber says. The industry anticipated FedEx’s announcement, especially with the earnings warning the provider issued. “They missed earnings by a substantial amount, and volume's dropping. They're going to need to increase their revenue per piece in order to offset volume losses and build out the investments they need in for their infrastructure.” He sees large increases from UPS due to pending labor negotiations.
On the positive side, he says, new providers are “popping up almost on a daily basis, whether it's regional carriers, postal consolidators, last miles, or crowdsource delivery providers. There are a lot of options to help us as we move into 2023.”
Timely, incisive articles delivered directly to your inbox.