Consultant Insight: FedEx’s latest earnings are all about e-commerce

[caption id="attachment_69752" align="alignright" width="348"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] FedEx’s latest quarterly earnings report continued this year’s string of impressive revenue and profit gains. The company’s overall revenue for the quarter was up 19.1% to $20.6 billion for the quarter ending Nov. 30, while operating income was $1.47 billion compared to $554 million in the same period last year. The adjusted operating income was $1.51 billion compared to $684 million in 2019, and the operating margin was 7.1% and 7.4%, when adjusted. FedEx Ground continued to amaze by reporting revenue of $7.3 billion, up 38.2% in the wake of the rapid shift from in-store to online purchases resulting from COVID-19. Average daily volumes for the Ground division were up 29% year over year, and revenue per package was at $9.42 compared to $8.80 in the same period last year. Executive Vice President and Chief Marketing and Communications Officer Brie Carere provided insight on international general air cargo trends during the company’s earnings call, saying, “Currently Asia-to-U.S. and Asia-to-Europe passenger capacity is expected to recover to pre-COVID levels by 2023, and Europe to U.S. is expected to recover by 2024.” Carere further noted, “Our goal is to profitably take market share and keep it beyond the capacity shortage internationally. As such, we are prioritizing business from small and medium customers, and reprioritizing any volume from resellers, ensuring we protect the business that will stay with FedEx for the long term.” To address capacity constraints, FedEx Express adjusted transit times and embargoed its deferred services. “We will continue to lean into international e-commerce as it remains a significant international market opportunity,” Carere said on the earnings call. “It will also enable improved flight density to further increase revenue per flight. E-commerce will, however, drive lighter international parcels. So, yields per pound will become an increasingly important metric.” For Q2 of its fiscal year 2021, FedEx Express’ revenue increased almost 5% to $10.3 billion, and operating income increased to $900 million from $236 million for the same period last year. Average daily volumes for FedEx Express’ International Priority increased 32.4% compared to a 6% decline in volumes for the group’s International Economy. The former is a time-definite, customs-cleared, door-to-door service for packages up to 68 kg, while the latter is similar to International Priority but for packages exceeding 68 kg. In terms of revenue per package, International Priority was $53.26 and 4.4% higher than last year, but International Economy was $35.29, down 19.7% year over year. Collaboration among the FedEx divisions was also emphasized on the earnings call, and described as “an important and strategic shift for FedEx.” So far, 10 million primarily rural and residential packages from FedEx Express have been delivered by FedEx Ground. FedEx Ground has also collaborated with FedEx Freight to deliver 1.5 million packages — up 435% year on year. “We are making sure that we put the right package in the right network and the right cost to serve,” said Raj Subramaniam, co-president and co-CEO of FedEx. FedEx’s recent acquisition of ShopRunner will factor into the collaboration among the company’s divisions, as well. ShopRunner’s technology, and specifically the connectivity between brands and merchants on its technology platform, is an important score for FedEx; both fit the company's goal to create a more open collaborative e-commerce ecosystem that benefits merchants and shoppers, according to Subramaniam.

Consultant Insight: FedEx’s latest earnings are all about e-commerce

Crane Worldwide looks to ‘600-mile radius’ distribution model for vaccines

YYZ sees record freighter activity ahead of vaccine shipments

Related Posts

FedEx tops estimates while warning of trade policy pressure

FedEx’s Richard Smith to participate in main fireside chat at Cargo Facts Symposium 2026

UPS boosts Mexico automotive network

YYZ sees record freighter activity ahead of vaccine shipments

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password