Why Is Fedex So Expensive? (11 Reasons Why Prices Are Increasing)

You can’t swing a cat these days without hitting a price increase. Gas costs are almost triple what we paid last year and the cost of a gallon of milk is up 25 percent from last year. A study by the Bureau of Labor Statistics found that the average worker now has to spend an extra 4 percent to meet living and commuting costs.

With many services, it’s become harder to choose where you want to ship your packages. When you ship with FedEx, you get a fast and inexpensive way to ship a package, but shipping can be expensive. Read on to learn more about FedEx shipping costs.

Why Is FedEx So Expensive In 2022?

> This is due to the fact that they are not able to properly source the goods they need through alternative resources. This is due to oversupplying of goods and not enough demand.
>
> These goods were shipped from China and other countries due to oversupplying but there was not enough demand to process the goods at the processing centers. This has caused a shortage of resources to process the goods as well as higher operating costs.

If you want to save more money when you send something by FedEx, keep reading to learn more about how FedEx prices get set.

1. Fuel Surcharge Increase

FedEx relies on gas stations to deliver their packages.

Whether delivery trucks or pilots, fuel is the common denominator that keeps the FedEx network running.

FedEx has experienced many issues with oil and gas pipelines in the past, which has left the company with higher costs to deliver packages. With the increase of gas prices, the company had to increase prices to stay viable.

While gas prices rose due to rising demand and the shortage of refining capacity, the price of gas spiked following the coronavirus outbreak.

Fuel surcharges are being increased for all freight shipments. These surcharges are intended to offset future fuel costs. This is something we regularly review and we are doing our best to ensure this is an effective way to manage fuel costs.

This charge is based on the distance required to make a delivery and the cost of gasoline.

A survey found that domestic fuel surcharge at FedEx is 16.25%, the cost for fuel surcharge in the past was 15%.

2. Overnight and Weekend Delivery Options

With FedEx Ground, you simply add items to a cart, pay a shipping fee, and pickup items at the FedEx Ground outlet.

FedEx driver program started in 1995. The first delivery trucks were white but when they got dark blue, we started to notice them and when they started to wear red, we knew that winter was coming.

It is a good thing that many package delivery companies offer service on weekends. Many people want to have their packages delivered on Saturdays and Sundays.

The cost of delivery drivers is higher than its competitors, so the prices aren’t as low as its competitors.

3. A Tough Operating Environment

Because of the pandemic, FedEx has to spend a lot of money on PPE equipment and barrier systems to protect its employees and customers.

FedEx also reported that it was spending $125 million on PPE in 2020.

The company is not able to cover the expenses in the amount that they were paying before.

4. Supply Chain Delays

China’s decision to remain on lockdown until 2022, combined with the current situation in the world’s shipping hubs, means that supply chain issues are getting worse.

if you’re not making any money, the customer isn’t getting what they want, and you will never get anywhere.

As a result, costs go up. These price increases trickle down to shipping companies and then customers. This cost increase goes to the customer. This increases the price for the item. This can be a problem if the customer finds out about the price from another source.

5. High Prices for International Shipping

International shipping is on the rise in 2020 due to a decrease in the number of available containers and lack of sufficient workers to unload and load them. The only way to increase the amount of cargo being shipped is to utilize another shipping method.

China has been affected by the coronavirus outbreak. This has increased the cost of production, and as a result, many factory workers are laid off, causing problems in China’s economy.

Shipping costs have increased, especially due to the fact that container ships and other large vessels are being replaced by new technology. But it’s not always just that. There are other factors at play.

So that’s really all we can do. We can continue to work on the best ways to deliver our product and then just hope that it doesn’t get so expensive that consumers won’t do it any more.

6. Add-on Services

Shipping via FedEx is the base shipping cost. Shipping is only the base shipping cost plus additional charges.

Signature delivery is a service that automatically sends your bills to the client upon arrival.

The most effective way to find the lowest possible shipping charges is to calculate them using our calculator.

7. Soaring Customer Demand

In an effort to adapt to the current conditions, online retailers are giving the option of eCommerce to their customers.

Demand for delivery services is increasing but the problem is that logistics companies like FedEx are struggling to keep a handle on demand.

It seems like they just can’t keep up with the volume of parcels they are handling.

They were having trouble with the old models, so they took a higher price, and it made them quite a bit of money.

This means that the company will be able to update the system and expand the network so that they can provide a good quality level of service to customers.

8. Salary Increases

FedEx has a history of raising pay for employees with decades of service, and often increases it every year.

But since the start of the coronavirus pandemic, the company has had to increase starting wages for all employees by about 2% in order to draw in new workers.

In addition, FedEx added annual merit increases and $100 bonuses for employees that refer customers.

Raising consumer prices has been one of the main financial reasons behind these pay raises.

9. Fees and Surcharges

They’re charging you $12.00 for handling which is basically a profit margin for them.

The transaction fee charged by the card company for each transaction.

10. Holiday Fees

Â FedEx is adding additional fees to shipments during the holidays to compensate for the increased demands.

E-commerce companies are taxed, if they do not pass the costs on, merchants are charged a small fee called GST.

This season begins on November 1, and you’ll be charged $1.50 more than last season per economy delivery.

If your order is large enough to qualify for the free economy shipping, there may still be a surcharge applied. This only applies to ground delivery.

* You can get your packages delivered to you, even when you’re away.
* You select how you want to be notified of deliveries.
* You can track your deliveries and change your delivery options.
* You can get your deliveries delivered to you at the address you want to receive them at.
* You can get your packages delivered to your mobile phone for easy home delivery.

The company will charge a $3-per-package fee starting on November 30th until December 10th to compensate for Black Friday and Cyber Monday purchases. The fee will also apply to purchases made in December.

The next price is at $1.50 starting from December 24 to January 20.

This is the first time I am seeing the time frame for when the next price point is.

After the holidays, FedEx will charge more often just because they’re charging you a few extra bucks for the holidays.

11. Rate Hikes

FedEx is so expensive because they keep raising their prices. Indeed, in 2022, they are going to keep raising their prices by 5.9%.

The increase in shipping rates is a result of the difficult economic situation FedEx is currently experiencing.

The costs are rising because the company is investing in itself and continuing to provide excellent customer service.

If you haven’t already read our post on the USPS vs FedEx, why is FedEx so bad, and why is FedEx so slow.

Conclusion

In my opinion, FedEx is expensive mainly because they are a big company, have a lot of employees and they make a lot of profits.

When it comes to consumers, they can only tolerate paying more and more, but knowing that FedEx is investing in its workforce and infrastructure may make higher costs more palatable.