On September 22, 2022, FedEx announced a 6.9% general rate increase (GRI) for 2023, the largest year-over-year increase in its history.
This staggering increase will apply to all offered FedEx services except for its less-than-truckload freight service. Furthermore, these increases will range between 6.9% and 7.9%, depending on transportation rate scales (according to FedEx itself).
Shares of FedEx plunged 21% last Friday, – the biggest one-day drop in its history – after the company warned that a slowing economy will cause it to fall $500 million short of its revenue target.
In a normal situation, FedEx raises its annual tariff rates between 4.9% and 5.9%. 2023’s GRI increase of 6% was expected (or more) to offset the impact of cost inflation.
Along with the increase, FedEx plans to save up to $2.7 billion during the current 2023 fiscal year through cost reductions for FedEx Express air, FedEx Ground U.S. delivery, and international transport units. FedEx also promises to reduce the number of FedEx Express flights – which could result in saving between $1.5 billion and $1.7 billion.
FedEx Ground units will save $300 million to $500 million by closing certain operations and suspending certain delivery operations in order to compensate.
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