FedEx to add freighters and increase spending to meet demand
FedEx will increase spending over the coming year and add more freight orders to meet the growing demand for e-commerce.
Announcing its annual results for the fiscal year ended May 31, the express giant said it planned to spend around $ 7.2 billion in fiscal year 2022, up from around $ 5.9 billion Last year.
Meanwhile, FedEx will exercise options to purchase an additional 20 B767Fs, 10 for delivery in fiscal 2024 and 10 for delivery in fiscal 2025.
The investments will also include 16 new automated installations and the implementation of nearly 100 expansion projects at its ground division.
“To manage future ground volumes, we are dramatically increasing our ability to provide both excellent service and better financial results,” said President and CEO Fred Smith.
“This summer, we are intensely focusing on improving network and delivery operations before volumes spike in the fall. “
Regarding the air freight market, FedEx said trade volumes have exceeded pre-pandemic levels and are on course for the fastest growing year in more than a decade.
He said global air cargo capacity remained down 10% year-on-year in April due to declining bunker capacity.
FedEx expects air freight capacity to remain tight for at least the first half of the year and capacity recovery to be slow and possibly episodic. A full recovery is not expected before 2024.
The company also believes that the “favorable” prices internationally are expected to continue through fiscal 2022.
It will manage international demand through performance management and peak overloads, particularly on the transpacific and transatlantic routes. Currently, he sees a “very good catch rate” on surcharges.
The previous fiscal year, the company saw revenues increase to $ 84 billion from $ 69.2 billion the previous year and operating profit was $ 5.9 billion from $ 2.4 billion.
In the fourth quarter, revenue was $ 22.6 billion versus $ 17.4 billion the previous year and operating income was $ 1.8 billion versus $ 475 million 12 months earlier.
“Fourth quarter operating results increased primarily due to volume growth and disciplined revenue and portfolio management,” the company said.
“These factors were partially offset by costs to support strong demand, increased variable compensation costs and higher labor rates. “
FedEx Express’s fourth quarter operating profit more than doubled year-over-year, thanks to exceptional growth in international exports and domestic parcel services in the United States.
FedEx Ground reported record earnings for the quarter and revenue growth of 27%. The increase in revenue is mainly due to strong growth in business-to-business shipments and a 14% increase in revenue per package.
FedEx Freight reported a record profit and operating margin of 16.1% for the quarter, as average daily shipments increased 30% and revenue per shipment increased 6%.