Thursday, September 17, 2015

FedEx Puts Freight Rates Up and Reports Lower Q1 Financials Than Those Predicted

Express Tariff up by 4.9% in January as Analysts Wrong on Expected Profits
Shipping News Feature

US – Prior to releasing first quarter financial results, which fell below those anticipated by many market analysts, FedEx announced some comprehensive freight rate increases to come into force in January 2016. From January 4 FedEx Express will raise rates by an average of 4.9% for US domestic, export and import services with rate increases also for both FedEx Ground and FedEx Freight services.

The news comes as European regulatory authorities are considering the group’s bid for TNT as we reported in August. Last year FedEx, along with competitors UPS, changed the parameters for charging with the introduction of package sizes as well as weight into the equation on certain services.

The financial report, which nevertheless quoted Q1 earnings up on 2014, blamed lower cargo movement in the US and higher running costs but it was the less than truckload (LTL) factor which carried most of the blame with the company lowering expectations for industrial production in the US, something which impinges directly on that sector. Mike Glenn, chief executive officer of FedEx Corporate Services commented:

“The LTL industry is very closely tied to industrial production, with the lower projection for manufacturing output it’s not surprising we’d see an impact on volume not only at FedEX, but on the industry as a whole. We hope we’ve seen the worst of that.”

Links to the FedEx shipping rates changes can be seen here whilst full details of the first quarter figures are here.