FedEx (FDX), the world's biggest air-cargo carrier, will boost shipping rates in January as it looks to offset the effects of rising fuel costs on its bottom line.
On Jan. 3, the company will increase FedEx Express shipping rates for domestic and export services by an average of 3.9%. FedEx's actual planned 5.9% average-rate hike will be mitigated by 2 percentage points when factoring in an adjustment to the minimum threshold for fuel surcharges, the company said in a statement Wednesday.
"This pricing adjustment will allow for key investments that will enable FedEx to continue to provide industry leading service and shipping solutions," said FedEx Executive Vice President T. Michael Glen in the statement.
Earlier this month, FedEx said earnings for its most recently completed quarter more than doubled from a year earlier to $380 million, thanks to an 18% increase in revenue, lower depreciation expenses, and other costs that remained relatively stable, all of which more than offset the impact of higher fuel prices. Fuel costs jumped 33% to $887 million and accounted for 9.4% of sales, up from 8.3% a year earlier. The company also said it would lay off 1,700 workers after combining its FedEx Freight and FedEx National LTL operations in late January.
In November, FedEx will also boost rates for FedEx Freight and FedEx National LTL by 6.9%. Rate changes for FedEx Ground and FedEx SmartPost will be announced later in the year, the company said Wednesday.