Written by Rich Harkey. Rich is a logistics and transportation expert. He is the Corporate Director of Sales for Lojistic, and helps companies find ways to save money on shipping. With 27 years of experience working in the transportation/logistics industry, he brings a wealth of experience, knowledge and perspective to his clients. Rich is an Associate of Strategic Choice Partners.
FedEx Labor Shortages Are a Cause For Concern
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 multiple factors contributing to labor shortages. But whatever the reason, the bottom line is your business could be negatively impacted by FedEx’s inability to manage your packages as advertised – regardless of whether you ship with FedEx or not.
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 its 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 could cause issues. For example, if your website promises delivery within a certain time period, 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, your business 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 it’s already been announced 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 November 5, FedEx has not released the full extent and details of its rate increase. Therefore, the impact of the rate increase on surcharges and fees remains unknown.
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. There are logistics consultants who can help your business analyze your shipping profile to determine if regional carriers are a viable option for you.
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. There is also free software available that will allow your business to track time-in-transit trends and manage invoice errors as a result of delivery issues. Feel free to reach out to me to learn more anytime. I help direct selling companies regularly assess their cost-savings opportunities when it comes to their shipping costs.
SHARE THIS ARTICLE: