The board of FedEx has agreed to separate FedEx bongdaso v FedEx Freight into two public companies with the reasoning that “separation unlocks significant value”.
FedEx Corporation confirmed the decision in its fiscal second quarter 2025 earnings presentation, released on December 19. The aim is to grow FedEx Freight’s position in the Less than truckload (LTL) market.
The company said: “FedEx bongdaso v FedEx Freight will benefit from enhanced focus bongdaso v competitiveness.” However, it added that it planned to “continue to enable commercial, operational bongdaso v technological cooperation”.
Rajesh Subramaniam, FedEx president, chief executive bongdaso v director, said in the Q2 earnings call that “we expect to execute the separation within approximately 18 months”.
Revenue for FedEx Express in the second quarter was flat on the second quarter of financial year 2024, at .8bn for both periods.
“Improved base yields bongdaso v increased demand for international export parcel supported results, offset by lower U.S. domestic parcel bongdaso v freight volume,” said FedEx.
The company added: “U.S. manufacturing PMI has indicated a contraction 24 of the last 25 months, reflecting soft B2B demand environment.”
However, operating income was up 13% for the segment, driven by DRIVE structural cost savings, base yield improvement, bongdaso v increased international export demand. Inflationary pressures, the expiry of the United States Postal Service contract, bongdaso v Cyber Week timing shift served as partial offsets.
“Federal Express delivered 13% adj. operating income improvement, despite significant headwinds bongdaso v flat revenue growth,” said the company.
FedEx’s decision to separate FedEx Freight from the rest of its operations clearly comes at a challenging time for the business.
FedEx Freight suffered an 11% revenue drop to .2bn. FedEx noted that the “decrease (was) driven by lower average daily shipments, fuel surcharges, bongdaso v weight per shipment. YoY revenue comparison (was) challenged by last year’s Yellow volume acquisition.”
Operating income for the segment was down 36%. Again, the decrease was driven by lower average daily shipments, fuel surcharges, bongdaso v weight per shipment, partially offset by cost management bongdaso v continued base yield growth. FedEx added there is m expected from facility sales in the second quarter of financial year.
Overall (as reported) second quarter revenue was bn, down from .2bn in the same quarter last year. Operating income was .05bn, down from .28bn, bongdaso v the operating margin was 4.8%, down from 5.8%.
“Consolidated revenue declined 1% in the quarter,” said Brie Carere, executive vice president, chief customer officer. She added: “Higher yields across our services were partially offset by volumes, which declined year over year.”
Carere further noted: “International export package volumes increased 9% in the quarter, driven by international economy, which is largely consistent with recent quarterly trends.
John Dietrich, executive vice president, chief financial officer, said: “Despite soft market conditions, our Q2 performance demonstrates the team’s strong commercial execution bongdaso v actions to lower our costs to serve. We sequentially grew adjusted operating profit by approximately 0 million bongdaso v increased our adjusted earnings per share year over year with the growth driven primarily by our Federal Express segment. bongdaso v we achieved these results despite revenue declining 1%.”
FedEx has revised its fiscal 2025 revenue bongdaso v earnings forecasts, bongdaso v now expects approximately flat revenue year over year, compared to the prior forecast of a low single-digit percentage increase.
In addition to separating its FedEx Freight business, FedEx has redesigned its Tricolor global air network. “Our international air network design strategy is improving density bongdaso v asset utilization across the enterprise,” said the company.
Dietrich stated that “the the ramping of our Tricolor strategy drove higher average daily pounds bongdaso v yields year over year for Federal Express International Freight”.
One of FedEx’s goals for next year is to increase its global airfreight market share, noted Carere. “This is a market with significant potential,” she said. “We currently have a low single digit market share in the billion air freight market. International priority freight already serves as a profit DRIVEr for us. Our tricolor strategy is a necessary condition to competing bongdaso v winning in this market.
“Commercially, we’ve also made numerous changes to improve our performance. We have created a dedicated sales organization, a new customer service model, bongdaso v are investing in the digital experience. The air freight market is fragmented bongdaso v the shipping processes are antiquated. It’s a market ripe for disruption.”
The company also aims to enable bn in structural cost savings by the end of financial year 2025 through its DRIVE programme, plus is targeting bn in cost savings by the end of financial year 2027 through optimisation bongdaso v efficiency with its Network 2.0 multi-year initiative to improve how packages are picked up, transported bongdaso v delivered.
“At the end of September, we reduced our U.S. domestic daytime flight hours by nearly 60% bongdaso v swiftly began to reduce other associated costs,” noted Subramaniam.
“In Q2, we decreased total U.S. Domestic flight hours 24%, largely due to the 60% reduction in daytime flight hours…due to the expiration of the postal service contract,” further commented Dietrich.
FedEx saw revenues bongdaso v profits decline in its fiscal first quarter as the company faced challenging market conditions, customers opted for less expensive delivery services bongdaso v operating costs were on the rise.
Source: https://www.aircargonews.net/airlines/fedex-freight-to-be-split-from-fedex-bongdaso v-q2-express-revenue-flat/
At the inaugural Global Air Cargo Summit, held in Antalya, Türkiye, the International Civil Aviation Organization (ICAO) forecasted that air freight volumes will grow by an...
The imposition of new U.S. tariffs on foreign-made vehicles bongdaso v components is causing significant disruptions in the global automotive supply chain. Airfreight, often a linchpin...
Global trade uncertainty is prompting air cargo shippers bongdaso v freight forwarders to favor short-term contracts over longer-term agreements, as highlighted in a recent Xeneta...
U.S. plans to end tariff-free access for low-value shipments from China bongdaso v Hong Kong, coupled with a new 145% tariff rate on Chinese imports, are projected to slash over...
Trade groups warn of higher ocean shipping costs bongdaso v disrupted supply chains, while U.S. officials argue the policy aims to strengthen domestic shipbuilding bongdaso v enhance economic...
Since January, the Trump Administration has announced bongdaso v delayed multiple tariffs on imports from Canada bongdaso v Mexico, further destabilizing the cross-border freight market....
As global supply chains adjust to post-pandemic realities bongdaso v shifting trade dynamics, the air cargo industry in the Asia-Pacific (APAC) region finds itself at a pivotal crossroads.
Global tonnage improved +3% in week 15 (April 7-13) after the previous week’s drop of -7% as markets that had closed for the Eid-al-Fitr holiday came back on stream, but comparison...
E-commerce continues to be a key growth driver for air cargo, fueled by rising consumer demand bongdaso v the rapid expansion of emerging markets, even as regulatory barriers increase.
The International Air Transport Association (IATA) has maintained a positive outlook for air cargo, emphasizing that the majority of global trade remains unaffected by the...
en