Watch: Preparing for record increases in package rates

The rate increases announced by FedEx for 2023 are the largest in history, says John Haber, chief strategy officer at FedEx traffic insight. Shippers and consumers need to prepare now.

Aside from the average rate increase FedEx has announced for the last week of December 2022 and through 2023, there are more than 20 surcharges that drive double-digit rate increases. “When you combine these increases with the overall rate increase of almost 7%, you see massive increases for both shippers and consumers,” says Haber. “And the shippers will pass these on to the consumer.”

However, there is still some time to prepare for rate hikes, he says. “In order to develop your budget for 2023, you have time to renegotiate and examine different options,” says Haber. “We now have time to plan ahead and try to offset and mitigate some of these significant increases. If you wait until next year, it’s too late.”

Of course, FedEx isn’t the only provider raising rates. UPS was preparing to announce its own increases, and the US Postal Service had already done so, although Haber describes the latter’s increases as “much less problematic” for shippers.

That’s not the end of the increases, Haber says. The industry anticipated FedEx’s announcement, particularly with the provider’s profit warning. “They missed out on profit by a significant amount and the volume is going down. They need to increase their revenue per unit to make up for lost volume and build the investment needed for their infrastructure.” He sees big increases from UPS due to pending collective bargaining.

On the plus side, he says, “new providers are popping up almost every day, be they regional carriers, postal consolidators, last-mile or crowdsourced delivery providers. There are many ways to help us on our way to 2023.”