FedEx Express Cuts Prices in Bid to Fill Planes, Compete with UPS

FedEx is cutting prices on two-day express shipping, matching two-day ground shipping prices, for some customers, in order to win over more eCommerce business from its main competitor UPS. FedEx told the Wall Street Journal the 3PL hasn’t changed its pricing strategy. The reported move comes amid a sharp, near 12% decline in per-package revenues for FedEx’s Express business in the last year, as its air freight arm tries to adapt to a rapid increase in eCommerce parcels and retail expectations of two-day and one-day shipping. Rather than reduce the number of active planes in its fleet, the company is working to fill them, banking on eCommerce package volumes doubling to 100 million packages shipped per day by 2026. In general, the challenge with air freight is carriers stand to lose revenue when planes are not filled to capacity or carrying enough weight in packages to make it worth the operating expense when compared to an alternative mode of ground shipping. As a result, traditional carriers are shifting their strategy. Lufthansa, for example, split its air cargo line of business to start a wholly new subsidiary dedicated to eCommerce clients in order to dedicate resources more efficiently and tailor its services specifically to online retailers as the space continues to grow. In addition to trying to fill its planes, FedEx is working on expanding its distribution network on the ground.
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