- FedEx announced that its express, ground and home delivery rates will increase by an average of 6.9% starting in January of next year. Also FedEx Freight rates will increase to 7.9%
After FedEx warned last week that its results have been affected by the weakening of world demand, the parcel company announced that it will increase its rates starting in January of next year.
Last week, FedEx warned that a global recession could be looming as demand for package delivery around the world plummets.
The weakening global economy, particularly in Asia and Europe, has affected FedEx’s express delivery business. The company said package demand weakened considerably in the closing weeks of the quarter.
“We are moving with speed and agility to navigate a difficult operating environment, pushing cost, business and capacity levers to adjust to the impacts of reduced demand,” said CEO Raj Subramaniam.
How much your rates will increase
For this reason, the company said that its express, ground and home delivery rates will increase by an average of 6.9%. Also FedEx Freight rates will increase by an average of 6.9% to 7.9%.
With this change, the company believes it will save between $1.5 billion and $1.7 billion by parking planes and reducing flights. Closing certain locations, suspending some Sunday operations and other spending actions will save FedEx Ground between $350 million and $500 million, according to the company.
FedEx said it will save an additional $350 million to $500 million by reducing the use of suppliers, deferring projects and closing offices.
For its fiscal year 2023, the company expects total cost savings of $2.2 billion to $2.27 billion.
Last week, the company’s shares sank 21%, the biggest one-day drop in its history, after it warned that a slowing economy would cause it to fall $500 million short of its revenue target.
Despite his grim warning, FedEx stood by its 2025 projections set in June. The company forecasts annual revenue growth of between 4% and 6%, and earnings per share growth of between 14% and 19%.