FedEx Express is pain point for FedEx in second quarter
23 / 12 / 2022
Photo: FedEx
FedEx faced continued weak market demand for air cargo in the second quarter with FedEx Express a particular pain point.
In the second quarter ended November 30, the transport company said previously implemented cost reduction measures helped soften the blow of reduced FedEx Express revenue.
Second quarter fiscal 2023 revenue was $22.8bn compared to second quarter fiscal 2022 results of $23.5bn.
FedEx Express revenue is $10.9bn for the second quarter of 2023, down 6% on the same period last year.
FedEx Ground revenue is $8.4bn, up 2% on the same period last year and FedEx Freight revenue is $2.5bn, up 8% on the same period last year.
Earlier this year, the company suffered the effects of lower than expected volumes, prompting it to plan cost reduction initiatives.
In the latest fiscal quarter, FedEx Express operating income declined 64% year-over-year due to lower global volumes, partially offset by an 8% package yield increase.
In response, FedEx Express implemented previously planned and incremental cost reduction actions during the quarter to mitigate the impact of volume declines, including structural air network changes and the temporary parking of aircraft.
FedEx Ground FedEx Ground operating income increased 24% year on year, due primarily to a 13% yield increase and cost reduction actions.
These factors were partially offset by increased purchased transportation rates, lower package volume, and higher other operating expenses.
FedEx Freight operating income increased 32% year on year, driven by an 18% yield increase, which was partially offset by higher salaries and employee benefits and decreased shipments.
“The FedEx team moved with urgency to make rapid progress on our ongoing transformation while navigating a weaker demand environment,” said Raj Subramaniam, FedEx president and chief executive.
“Our earnings exceeded our expectations in the second quarter driven by the execution and acceleration of our aggressive cost reduction plans. At the same time, we continue to focus on delivering excellent service for our customers.”
“Our teams have an unwavering focus on rapidly implementing cost savings to improve profitability,” said Michael C. Lenz, FedEx Corp. executive vice president and chief financial officer. “As we look to the second half of our fiscal year, we are accelerating our progress on cost actions, helping to offset continued global volume softness.”
IATA World Air Transport Statistics (WATS) 2021 data showed FedEx retained its position as the top cargo airline in 2021, albeit with a lower growth level than many of the other top-performing airlines.
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