It continues to be true: FedEx is shipping more packages and charging more than ever to do it.
During FedEx’s fiscal year 2018 fourth quarter and year-end earnings call, chairman and CEO Fred Smith began by congratulating the company’s 425,000 people on a strong fiscal 2018.
“In all my years at FedEx, I have never been so optimistic and so sure of our strategy and our ability to deliver an exciting future,” he said.
With that, the tone was set.
FedEx announced its fiscal revenue was up 7.9% at $65.5 billion over FY 2017, and revenue was up 9.1% at $17.3 billion for the fourth quarter. It was another record earnings report, a year-by-year trend we’re getting used to.
The key takeaways
- FedEx acknowledges that record revenue continues to be the result of ongoing increases to base rates, volume growth, and the favorable net impact of fuel for each service segment.
- The FedEx Ground segment saw revenue growth driven by average daily package volume growth of 6% in coordination with base rate increases. As has been the trend, ecommerce is expected to be a strong margin driver, according to Henry Maier, President and CEO of FedEx Ground.
- The Express segment also hit records, with revenue up 9% thanks to higher yields across its global portfolio of package and freight services.
Next steps for parcel shippers like you
You’ve felt the effects of those profitable 2018 rate increases for months now.
(By the way, the effective cost impact is higher than the 4.9% bump FedEx and UPS cite).
And you know 2019 rates – certain to include additional increases – will be announced within weeks.
Now’s the time to reconnect with your FedEx or UPS rep to work toward mitigation strategies. And while you’re at it, enlist VeriShip and its benchmarking to validate that your carrier agreement isn’t one-sided.