Yesterday, Memphis-based FedEx reported revenue up 11.5% y-o-y for its 1QFY19 (ended 31 August) to US$17.05 billion. Operating income for the quarter rose 10.3% to $1.07 billion, while net income jumped 40.1% to $835 million.
Looking beyond the quarter, company CEO Fred Smith told analysts during an earnings call the company is anticipating record-breaking volume during this year’s peak season, despite uncertainty from the ongoing trade war between the United States and China. Last week, FedEx announced it would expand its US ground operations to six days a week to better accommodate the demand for e-commerce-related shipments.
With regards to the trade war, Raj Subramaniam, EVP, Chief Marketing and Communications Officer with FedEx Corp., said that tariffs were not yet having much of an impact on its volumes and that the China-US trade lane represented only about 2% of the company’s revenues. Despite the minimal impact to date, FedEx reserves the right to delay aircraft deliveries in the event of an unexpected macro shock leading to a slowdown in global trade, said Alan Graf, EVP and CFO, FedEx Corp.
Returning to its financial results, FedEx’s Express segment had a strong first quarter, with package volumes growing across all segments except for U.S. Overnight Envelope, for which volumes dropped 1.1%. Overnight Box volumes, FedEx Express’ most popular and highest-yielding domestic product, rose 43.6%, while Deferred volume increased 4.6%.
Package yields increased across all FedEx Express segments. Per-package yield was up 4.0% for Overnight Box, 5.3% for Overnight Envelope, and 3.6% for Deferred.
International Export package volume growth, which had been sluggish in previous quarters, picked up momentum, with volumes up 5%. Composite per-package yield for export packages grew at a slower clip, rising 2.3%.
FedEx Freight and Ground saw notable volume increases during the quarter for nearly every product except International Airfreight, which saw daily freight lbs. drop 7.3%, to 1.7 million lbs. Revenue per airfreight lb., meanwhile, rose 10.1% to $0.76.
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