FedEx is cutting Sunday service in certain rural markets, lowering its national coverage from 95% to 80% on Sundays starting in mid-August.
FedEx did not specify exactly which rural markets would be losing their Sunday deliveries.
“As economic conditions have shifted, we are making operational adjustments to suspend Sunday delivery operations in certain low-density, rural markets,” FedEx said
in a statement to Bloomberg News.
The growth in online commerce led FedEx to implement delivery on Sundays in late 2019, a move that proved fortuitous during the COVID-19 lockdowns in 2020. Demand for online shipping has since declined from its pandemic peak.
FedEx’s decision to scale back rural deliveries comes amidst tensions with the approximately 6,000 contractors whose vehicle fleets and thousands of drivers make up FedEx’s provider network. Rising costs for fuel and labor have led these contractors to demand a pay increase.
In a recent letter to FedEx brass cited by FreightWaves, contractor Spencer Patton wrote that Sunday delivery had been a $500 million earnings drag on providers that also erased one-third of profit margins for providers in just one year.
In Mr. Patton’s words, Sunday delivery has been an “incredible struggle and a financial disaster for all parties involved.”
About half of FedEx’s contractors are set to meet in Las Vegas next month to create a 10-man committee that will speak to FedEx on behalf of all contractors.
In his letter to the company, Mr. Patton said that the timeline for these planned negotiations between contractors and FedEx would last until the start of the holiday season.
FedEx Ground is not blind to the strain the economy is putting on the provider network.
In an email obtained by FreightWaves, FedEx noted that dropping Sunday service in some markets would “recalibrate operations for current market conditions.”