FedEx suspended service for roughly 1,400 freight customers without warning this month, a move the company said was designed to relieve its overtaxed shipping network.
As The Wall Street Journal reported Thursday (June 24), the move surprised customers and left businesses scrambling to find a new way to ship products. The company has since resumed service to some of those customers.
The pandemic-fueled surge in eCommerce spending put pressure on shipping companies, but “FedEx has lagged behind rivals in keeping deliveries on time this year,” per the Journal.
A company spokeswoman told the paper the suspensions were “designed to minimize network disruptions and balance our capacity and demand to avoid backlogs across the country — particularly in the most capacity-constrained Freight service centers.”
In addition to the suspensions, FedEx will also impose a $30 shipment fee on freight deliveries in certain areas — Sacramento, Seattle, Miami and parts of New Jersey and Long Island — after July 5 to address capacity constraints.
The news outlet notes that FedEx has struggled with timely deliveries this year, with the COVID-fueled surge in buying coupled with “internal efforts to embrace more e-commerce deliveries as growth stalled in its larger and more-profitable business of delivering shipments between businesses.”
Last year, FedEx saw its B2B traffic fall as the B2C sector of its business skyrocketed in the midst of COVID-related e-commerce. The company is also exploring the use of autonomous last-mile deliveries with Nuro, thanks to a multi-year agreement signed last week.
This is all happening against a backdrop of an overall slowdown in shipping to businesses around the country.
The National Retail Federation reported last week that 70 percent of its members are seeing two or even three week delays in their supply chains, with a majority of these businesses saying they were forced to raise prices.