FedEx fights market weakness with continued cost cutting

Photo: FedEx

FedEx said it has continued to focus on cost saving initiatives in response to weak express demand as it reported revenue of $21.7bn in its first quarter 2024, ended August 31.

The company attributed a 19% improvement in reported net income to $1.1bn to its ‘DRIVE’ programme t0 improve operational efficiency and reduce expenses.

“First quarter results improved primarily due to the execution of the company’s DRIVE program initiatives and continued focus on revenue quality. The improvement in operating results was partially offset by ongoing demand weakness,” said the company.

First quarter 2024, ended August 31. Source: FedEx

Revenue at FedEx Express was down 9% year over year, but the division benefited from reduced operating expenses.

“Volume remained pressured though total Express volume declines moderated sequentially,” noted Brie Carere, executive vice president, chief customer officer.

FedEx Express operating income increased 18% during the quarter.

“Cost reductions and transformation efforts at FedEx Express included structural flight reductions, alignment of staffing with volume levels, parking aircraft, and shifting to one delivery wave per day in the US, all of which more than offset the impact of lower revenue,” added John Dietrich, executive vice president, chief financial officer.

At FedEx Ground, first-quarter revenue was up 3% year over year driven by a 1% increase in volume and 3% increase in yield. 

FedEx Ground operating income increased 59% during the quarter, primarily due to yield improvement and cost reductions. Cost per package declined more than 2%, driven by lower line-haul expense and improved dock and first- and last-mile productivity.

“Across the Ground and Express, volumes improved sequentially, aided by the threat of a strike at our primary competitor. We onboarded new customers who valued our service and were committed to a long-term partnership with FedEx, explained Carere.

At FedEx Freight, revenue was down 16% driven by a 13% decline in volume, said FedEx.

FedEx Freight operating income decreased 26% during the quarter driven by lower fuel surcharges and shipments, partially offset by base yield improvement. FedEx Freight completed the planned closure of 29 terminal locations during August.

“We started fiscal 2024 with strong momentum as our global transformation actions take hold and drive improved results,” said Raj Subramaniam, FedEx president and chief executive.

“FedEx Ground had an outstanding quarter which, when combined with improved earnings at FedEx Express and expense controls across the organization, led to our better-than-expected overall financial performance.

“FedEx is well-positioned to continue to deliver improved profitability while becoming an even more flexible, efficient and data-driven organization.”

Looking ahead, FedEx will continue to focus on consolidating FedEx Express, FedEx Ground, and FedEx Services into one company, ‘Federal Express Corporation’, by June next year.

FedEx to consolidate operating companies to cut costs

FedEx raises expectation as cost cutting continues


Share this story

Related Topics

Latest business news

US FAA orders urgent inspection of 747 lightning protection

The US Federal Aviation Administration (FAA) has ordered all US Boeing 747 operators to carry out urgent inspections of lightning…

Read More

Share this story

Insurance integration for Breeze and Barrington Freight

Barrington Freight has signed up with Breeze’s integrated digital insurance platform. Use of the platform removes the need to source…

Read More

Share this story

Asia holds demand and capacity cards

DHL Global Forwarding (DHL GF) paints a broadly stable picture for air cargo demand in its November ‘Air Freight State…

Read More

Share this story

Rebecca Jeffrey

Rebecca Jeffrey
New to aviation journalism, I joined Air Cargo News in late 2021 as deputy editor. I previously worked for Mercator Media’s six maritime sector magazines as a reporter, heading up news for Port Strategy. Prior to this, I was editor for Recruitment International (now TALiNT International). Contact me on: [email protected]