FedEx saw boost from rival UPS’s labor negotiations
It was beneficial for FedEx this summer to have one competitor strike and another bankrupt.
FedEx reported adjusted earnings of $4.55 per share during its fiscal first quarter, up from $3.44 last year. While FedEx’s chief customer officer, Brie Carere, said overall demand is “muted” and the macroeconomic picture is “a little bit softer,” FedEx increased its earnings-per-share guidance for fiscal 2024 to $17.00 to $18.50 from $16.50 to $18.50.
As we came into the quarter, we were determined to satisfy our customers to the best of our abilities. Raj Subramaniam, FedEx CEO, said the company met its goal despite industry dynamics. Thus, we are well positioned as we prepare for the peak season.”
UPS’s negotiations with the Teamsters Union and Yellow Corp.’s implosion during the quarter boosted the shipping company’s businesses.
Operating income for FedEx’s Express division, which delivers time-sensitive packages, increased 18% during the quarter, but revenue declined 9%. The company’s Ground division, which provides low-cost shipping services, reported a 59% increase in operating income. In part, FedEx credited cost reductions and increased efficiency for the significant income jump.
While UPS and the Teamsters Union agreed on a contract earlier this summer, FedEx won over customers from UPS amid the uncertainty of the negotiating process in its Express and Ground divisions.
“We onboarded new customers who appreciated our service and were committed to a long-term partnership with FedEx,” she said on the company’s earnings call Wednesday. We added approximately 400,000 in average daily volume by the end of the first quarter as a result.”
During the call, she added, “It’s my job to make sure that our primary competitor doesn’t regain that share.”.