FedEx® recently reported quarterly earnings and revenue surpassing expectations. Revenue exceeded $50 billion for its first time since it was established in 1971, increasing 20 percent year-over-year. This is a good indicator for the well-being of the US economy.
“A recovering economy coupled with the rapid growth of e-commerce should provide a lift to revenues, volumes and operating margins,” Jim Corridore, equity analyst at S&P Global, said in a report.
FedEx stated in the annual report that it is imperative that they continue investing for profitable growth by expanding their network capacity to match the predicted increase in e-commerce shipments. FedEx Ground recently invested $1.6 billion in FY16, including automated hubs in Tracy, California, and Ocala, Florida, and 19 additional automated stations.
Our key takeaways from FedEx’s 2016 Annual Report:
- In addition to earning record revenue during the fiscal year, FedEx increased its average daily ground package volume by 9 percent, an achievement driven by growth in e-commerce.
- Earnings climbed to $715 million, or $2.65 a share, from the $692 million, or $2.42 a share, it had reported for the previous year.
- From FY14 through FY16, FedEx returned more than $8.8 billion to shareowners through its repurchase of more than 63 million shares and increased dividends by at least 25 percent annually.
- FedEx expects moderate economic growth, with US gross domestic product up 1.6 percent in 2016 and anticipated rising 2.3 percent in 2017.
- Five years ahead of schedule, FedEx Express surpassed its goal to boost vehicle fuel efficiency 30 percent by 2020 from a 2005 baseline.
- FedEx predicts the value of e-commerce sales worldwide to be $2.4 trillion worldwide by 2018, a 26 percent increase from 2016.
As a result of FedEx’s 2017 rate increase, and anticipated increase in revenue, volume, and operation margins, it is becoming progressively more important for ecommerce and parcel shippers to have a deep understanding of their shipping profile and ensure that their carrier agreement is mutually beneficial, accountable, and fair.