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FedEx Freight Drops Customers in Capacity Crunch

Customers were apparently provided only short notice – one business day – of the FedEx suspension and must now act quickly to find replacement carriers, many of whom are experiencing similar capacity crunches.

About 1,400 less-than-truckload (LTL) FedEx Freight customers are now in need of a new freight carrier as FedEx Freight recently announced it would be cutting off their service as it attempts to rectify delays caused by an overwhelming amount of tonnage spurred by the COVID-19 pandemic and recovery.

In a statement to FreightWaves, FedEx spokesperson Jim Masilak explained the situation:

“FedEx continues to keep commerce moving and deliver critical shipments during the COVID-19 pandemic. The impact of the virus has generated elevated volumes, and we continue to experience high demand for capacity and increased operating costs across our network. As a result… FedEx Freight will begin implementing certain volume control actions to help balance capacity with demand.”

Customers were apparently provided only short notice – one business day – of the suspension and must now act quickly to find replacement carriers, many of whom are experiencing similar capacity crunches.

Trickle Down from FedEx Capacity Crunch Expected

An unnamed executive speaking on those affected by the FedEx Freight announcement told FreightWaves:

“It’s mass panic because there’s no available capacity to service them to begin with.”

As major carriers experience capacity crunches, those pushed to smaller carriers will certainly take up remaining capacity and likely bump the next set of customers from their rosters creating trickle down capacity crunches.

Avoid the Mad Dash with a More Diverse Transportation Network

Persistent delivery capacity shortages spurred by ballooning e-commerce volumes put many businesses at risk as trusted carriers increasingly prioritize capacity for their largest customers. Companies that invest in a cloud multi-carrier shipping system to create flexibility and diversity in fulfillment can better withstand potential carrier cuts by quickly turning to other carriers to ensure their deliveries reach their intended destinations in a timely fashion, avoiding the mad dash to source and secure capacity with another carrier with whom there’s no contract or relationship in place.

Who Can Pick Up the Slack?

The capacity crunch creates an LTL ecosystem that’s ripe for disruption as carriers struggle to handle the volume of shipments spurred by the pandemic and recovery. Perhaps LTL shippers will opt to change their model and employ a parcel approach. Maybe regional carriers will enter the mix and create more LTL flexibility in both number of carriers as well as service levels.

Whatever the result, the FedEx Freight announcement is likely just the tip of the iceberg and a sign of things to come – and the issue continues to evolve, per an update to this story from FreightWaves.

Whatever the result, the FedEx Freight announcement is likely just the tip of the iceberg and a sign of things to come. When shippers are tied to just one or two carriers, they’re beholden to the whims of the carrier facing a capacity crunch. Having access to more and different types of carriers and services can help minimize the impact of unexpected customer reductions and delays.

Contact us today to learn how Logistyx’s multi-carrier shipping software can help your business manage a wide range of shipping scenarios and optimize parcel shipping to help control costs.