FedEx Express flies high

FedEx Express is benefiting from e-commerce growth and air cargo capacity constraint. Source: FedEx

FedEx Express’ second quarter operating income surged 9% year on year to $1.6bn, driven by higher yields and FedEx International Priority volume growth, which offset the negatives of continued staffing challenges and COVID-19-related air network inefficiencies.

The US parcel and logistics giant’s FedEx Freight division saw second quarter operating income increase 33%. Revenue per shipment increased 14% and average daily shipments grew 3% during the quarter ended November 30.

“Strategic investments that we have made to our networks and systems have enabled us to provide critical delivery capacity and supply chain expertise to support the needs of our customers, while also making it possible for us to capitalise on the growing e-commerce parcel market,” said Raj Subramaniam, FedEx Corp. president and chief operating officer.

Subramaniam told an analysts call that FedEx Freight trucks have travelled 4m miles on behalf of FedEx Ground this year: “We will continue to look comprehensively at all assets in our network, including stations, hubs and equipment to put the right package in the right network at the best service for our customers.”

He added that FedEx’s international business, particularly Europe, remains one of the company’s “biggest opportunities” after completing in May this year the station integration with acquisition TNT. It will enable “full physical interoperability of these networks”.

Subramaniam said that Paris’ Charles de Gaulle Airport will serve as the main hub for all European and intercontinental flights after April 2022, while Liege will connect specific large European markets to provide flexibility and scale in the operational response to market needs.

FedEx expects supply chain constraints to remain. Subramaniam said: “Air cargo capacity is going to be constrained for some more time, and we are very well positioned for success here.”

He continued: “We have the network flexibility to scale up and down. The size and scale of our network is massive for us to be able to manage the cost accordingly as well. But for the foreseeable future, I think there is strong demand for our services internationally.”

Subramaniam said that FedEx remains in the centre of the e-commerce growth ecosystem: “When people talk about the last mile, sometimes and most times, they forget about the first few thousand miles.”

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