FedEx Corp. announced on Dec. 13 that it would discontinue money-back guarantees for most peak-season domestic and international air express shipments.
FedEx (NYSE: FDX) announced the suspension in a recent note published in its online service guide.
The suspension affects six overnight delivery services in the United States and four international services, including the company’s expedited freight deliveries.
This is the third year that FedEx has suspended certain air express shipments during the peak demand period of the holiday season.
Historically, delivery companies have provided money-back guarantees for late or missed deliveries as long as the affected shipper could provide sufficient proof of the original service commitment and the late or missed delivery. However, FedEx and competitor UPS Inc. (NYSE: UPS) suspended all money-back guarantees in the spring of 2020 due to pandemic-related changes in consumer purchasing behavior inundating the carriers with massive delivery volumes, making maintaining service guarantees difficult.
Except next-day air deliveries, the carriers never restored their guarantees. According to recent public comments by UPS CEO Carol Tomé, who stated in a late October interview with Bloomberg that “when you deliver at 98% effectiveness, service guarantees aren’t necessary,” the company appears unlikely to reinstate the program fully.
Late last week, UPS stated that it has no plans to change its money-back guarantee policy for the peak season.
FedEx announced in its peak-season suspension that the status of full money-back guarantees is “being evaluated on an ongoing basis” and that “our focus remains on continuing to provide the best possible service to our customers during this period of uncertainty.”
