Fuel prices were a major factor in lowered profits at transport and logistics giant FedEx. “FedEx faces a challenging economic environment that includes persistently high oil prices, sluggish US growth and continued concerns in the credit markets,” said Frederick W. Smith FedEx Corp. chairman, president and CEO.
Consolidated results for the third quarter showed revenues of $9.44 billion were 10% higher than the prior-year period, but operating income of $641 million was unchanged. The company's margin squeezed from 7.5% in the prior fiscal year to 6.8% in the current period. Net income was down 6% to $393 million.
FedEx Freight, the company's less-than-truckload (LTL) segment, reported shipments had declined 3% over the prior year though average daily LTL shipments improved sequentially throughout the quarter. LTL yield improved 5% year over year as rate increases (including a January 2008 increase) more than offset the July 2007 reduction in fuel surcharge, according to the company.
FedEx Ground grew average daily package volume by 7% in the third quarter, compared with the prior-year period. Increased commercial business and strong growth in FedEx Home Delivery service contributed.
At FedEx Express, revenues were up 11% and margins feel by 0.3% from the prior-year period. International priority revenue was up 18% for the quarter and per-package revenue increased 10% due to higher fuel surcharges and favorable exchange rates. Average daily package volume grew 6% in International Priority, led by increases in volume originating in Latin America, the United States and Asia. Fuel surcharges also helped US domestic revenue per package increase by 6% despite a 2% decline in domestic package volume.