Shares of transportation logistics giant FedEx Corporation shot up 19% in March. The reason behind FedEx’s strong mid-month spike? Formidable third-quarter earnings results. For the quarter, FedEx reported an adjusted profit of $2.51 per share (up 24% from 2015 third-quarter earnings) and revenue of $12.7 billion, a nearly 9% increase from the prior-year period, according to a study provided by S&P Global Market Intelligence. CEO Frederick Smith credits his company’s broad and far-reaching business solutions for this performance, but investors’ analyses indicate the Q3 surge has had more to do with FedEx’s express shipping segment. Although revenue dropped 1% year over year in express shipping, operating margins rose to 9.1%, bringing operating income up to $595 million. Lower fuel costs and cost-saving initiatives contributed to the rise.
Some investors point to Amazon’s growing logistics network, with its plans to integrate drones into their air-cargo plans and other lofty aims, as a threat to FedEx’s dominance. But Amazon’s primary focus has never been logistics, and FedEx has continuously proven skeptics wrong as of late. Of course, industry dominance only puts FedEx in a better position to increase rates, and an ever-expanding shipping volume means more shipping mistakes such as mischarges, overcharges and lost packages.
With LJM’s auditing service and contract leveraging expertise, you can save 2%-6% weekly and negotiate contract savings of up to 25%. We’ll also help you formulate strategies to make your products shippable under FedEx’s constantly changing parameters. Contact LJM at 631-844-9500 or email kenwood@myLJM.com.