Record holiday e-commerce shipments boost FedEx’s Q2 revenue

As reported by Internet Retailer
Average daily ground shipping volume grew 9.4% in the second quarter, primarily driven by e-commerce deliveries, FedEx says.
Record-breaking e-commerce demand during the holiday season increased revenue at FedEx Corp. 4.3% year over year in the second quarter, the company reported Wednesday.
FedEx posted revenue of $12.45 billion in the quarter ended Nov. 30, up 4.3% from $11.94 billion in the same period a year ago. The peak holiday season is producing more than double the average daily volume for the year, the company said in an earnings call with analysts, and the high volume of shipments is largely due to growth in e-commerce.
In October, FedEx projected a 12.4% jump to 317 million packages delivered between Black Friday and Christmas Eve. The busiest days during the holidays thus far have already exceeded the delivery carrier’s forecasts, Mike Glenn, president and CEO of FedEx Services, said on the call.
“A record number of holiday shipments fueled largely by the steady rise of e-commerce are flowing through the FedEx global networks,” chairman, president and CEO Frederick W. Smith said. “Monday, we picked up more than 26 million packages globally.” Average daily volume globally is about 11.5 million packages, FedEx says.
The FedEx Express segment, the delivery carrier’s biggest unit, generated $6.59 billion in revenue, down 6.1% from $7.02 billion a year ago. The company says the decline is due to lower fuel surcharges compared with last year, according to the earnings transcript from Seeking Alpha. FedEx’s Ground segment posted $4.05 billion in revenue during the second quarter, up 32.4% from $3.06 billion in the same quarter last year. The big increase is partly due to its acquisition of logistics provider Genco earlier this year, the company says. Genco generated $373 million in revenue for the quarter.
FedEx announced in September that it will raise shipping base rates for its Express, Ground and Freight units by an average 4.9% on Jan. 4. View the details on all FedEx fee changes here.
For the three months ended Nov. 30, FedEx reported:
  • FedEx Express segment decreased 6.1% to $6.59 billion from $7.02 billion a year ago.
  • Revenue from FedEx Ground segment increased 32.4% to $4.05 billion from $3.06 billion.
  • FedEx Freight unit revenue declined 2.5% to $1.55 billion from $1.59 billion.
  • FedEx Services segment increased 2.3% to $403 million from $394 million.
  • Total revenue increased 4.3% to $12.45 billion from $11.94 billion. Total revenue includes eliminations, which were a loss of $135 million, up 6% from $127 million. Expenses related to the settlement of independent contractor litigation and expenses related to FedEx’s pending acquisition of TNT Express were included in eliminations.
  • Net income rose 4.2% to $691 million from $663 million.
  • Average daily package volume in the U.S. increased 9.4% from 7.623 million for the 63 operating weekdays in Q2 from 6.967 million over the same period a year ago. This metric only includes FedEx Ground and FedEx SmartPost. In the SmartPost service, FedEx typically hands parcels off to the U.S. Postal Service for final delivery. SmartPost merged into FedEx Ground in August.

For the six months ended Nov. 30, FedEx reported:

  • Revenue rose to $24.73 billion, up 4.7% from $23.62 billion in the same period a year ago.
  • Net income increased to $1.383 billion, up 5.1% from $1.316 billion.
  • Average daily package volume in the U.S. increased 6.8% year over year to 7.163 million from 6.709 million.
 

Ken Wood is the founder of LJM Consultants. LJM helps clients negotiate “Best in Class” UPS/FedEx agreements. LJM was recently named the “best parcel auditing company in America” and was also inducted into Inc. Magazine’s Top 500/5000 fastest growing companies in America for 2013. To learn how LJM Consultants can help your company get the parcel contract you deserve, call 631-844-9500 or email kenwood@myLJM.com.