Does increase in FedEx 2020 shipping rates prelude strategy shift? 

FedEx announced new shipping rates for FedEx Express, FedEx Ground and FedEx Freight will come into effect Jan. 6, 2020. 

The new rates will include increases in surcharges and fees for FedEx’s U.S. Express Package Services, U.S. Ground Services, International Express Package Services, International Ground Services, U.S. Express Freight Services, International Express Freight Services, as well as an increase in fees for address correction and other delivery options within these services. Dangerous goods and oversize shipments will also see an increase in prices under the services listed above. 

Details on the price increases can be found on the company’s site. 

While FedEx did not explicitly state the strategy compelling these price changes, it is likely related to the “double-edged sword” e-commerce business has presented to the company, as reported by Bloomberg last month. While e-commerce sales have spurred express volume growth, they have also squeezed profit margins as home deliveries are more costly to handle than drop-offs to commercial customers. With this knowledge, the rate change is likely a move to increase revenue and support the company’s “ailing” European business. 

The announcement also follow’s FedEx’s recent break in its ground delivery deal with Amazon that may have bolstered competitor UPS’ relations with the e-tailer giant. Even as FedEx continues to deepen its global reach, the integrator will need to be creative in its strategy development in the coming year to offset the mid-single-digit percentage drop in earnings for the current fiscal year the company forecasted earlier this year in June.