In a recent post from Business Insider, FedEx said that it’s rerouting more than 600,000 business packages every single day.
Why are so many packages being rerouted?
According to FedEx - one of the largest parcel handlers and employers in the US - packages are being rerouted because they’re experiencing a major labor shortage. Simply stated, FedEx doesn’t have the workforce to manage the volume of packages it’s receiving daily.
Like many other industries, there are a number of factors contributing to labor shortages. But whatever the reason, the bottom line is your business could be impacted by FedEx’s inability to manage your packages as advertised - regardless of whether or not you ship with FedEx.
Here’s What You’ll Learn From This Post:
- FedEx’s Labor Shortage Issues
- Q4 Shipping Outlook
- 2022 Rate Increases
How Is Package Rerouting Impacting FedEx Customers?
Delivery times are longer because of package rerouting. In one major FedEx Ground hub, labor availability is 35% down from what it would require to manage current package volume. So, FedEx is diverting packages to buy time, which is causing slower end-to-end delivery speeds.
FedEx customers may experience slower pick-ups, longer deliveries and other inconsistencies that may cause issues. For example, if your website promises delivery within a certain period of time, yet FedEx can’t make good on that guarantee, your customer’s experience will suffer.
From the customer’s perspective, it’s your responsibility to provide timely delivery. And if their package arrives later than expected, the blame typically falls on you, not the carrier. Knowing that FedEx is experiencing a number of difficulties delivering packages on time will allow you to communicate that with your customers in advance. That way, you can maintain the high-level of service your customers expect.
How is FedEx Planning to Overcome Labor Shortages In Q4 and Beyond?
Peak holiday season surcharges and fees are currently in effect and we already know that FedEx will be raising rates in 2022. Effective January 3, 2022 FedEx will increase Express, Ground and Freight rates by 5.9%. As of October 11, FedEx has not released the full extent and details of it’s rate increase. Therefore, the impact of the rate increase on surcharges and fees remains unknown. We'll update this post with information once it's available.
Will FedEx’s labor shortages affect UPS shippers too?
It already has. As FedEx shippers look for alternatives to provide on-time delivery, many have naturally turned to UPS. With FedEx boiling over, UPS has picked up some additional volume. However, UPS is being selective in adding additional package volume to their networks to avoid finding themselves in a similar position. With strong demand UPS and FedEx are well positioned to make strategic moves. Typically, when one carrier announces a change (one that will negatively impact shippers), the other will usually follow. If you ship with both UPS and FedEx, you might want to consider moving more package volume to regional carriers, if applicable. If you need help determining what is best for your business, connect to the Lojistic platform to get a free shipping analysis.
How Can I Prepare for Longer FedEx Transit Times?
If you’re concerned about how your customers will react to longer transit times, be proactive. You can post information on your website and social accounts, email your customers and/or update the current shipping information you have listed on your website.
Your Lojistic account will help you measure on-time delivery performance and identify trends in transit times. If you’re a FedEx shipper and you’re having issues with slow transit time and late deliveries, you may be entitled to refunds. Lojistic can help you get back the money that you’re owed.
Monitor and Manage Your FedEx Costs With Lojistic
When you create a free Lojistic account all of your costs, including fees and surcharges, will be accounted for. Lojistic is the only free cost savings automation and analytics platform; designed to equip you with analytics and intelligence to support better shipping decisions. See how much you stand to gain, or lose - create your free Lojistic account today to be better prepared to push back against FedEx’s ongoing delivery issues and impending rate increase.