FedEx will be hiking rates by an average 4.9% as of January 7, 2019.
The courier delivery company had implemented a similar increase at the start of 2018. Its latest rate hike plan is possibly propelled by higher fuel costs and rising worker wages. In the quarter ending August, its fuel costs increased 40% from the year-ago period, and labor costs were up 11%. A booming online retail market has played a major role in increasing demand for delivery services. That means, there is a burgeoning volume that courier services have to meet and manage - something that could potentially increase total costs for courier firms, and therefore induce them to hike rates as a way to cushion their profitability.
Also, potential competition from e-commerce firm Amazon which is starting its own delivery business, could add further pressure on FedEx’s (or other delivery service firms') margins. Its competitor United Parcel Service might also increase rates by an average 5.9%, subject to government approval.