FedEx Corp. reported a dip in revenue in its 2025 fiscal Q1, which ended Aug. 31, 2024.
“Weakness in the industrial economy pressured our B2B volumes, particularly in the U.S.,” CEO Raj Subramaniam told investors during FexEx’s Q1 earnings call. “We saw increasing demand for our lower-yielding services, and some of this demand increase was driven by a shift in customer preference worldwide from priority to deferred services.”
He added that FedEx is “prepared for the expiration of the U.S. Postal Service contract” that will see USPS move air cargo business to UPS.
FedEx said merged its “FedEx Ground” and “FedEx Services” units on June 1 into Federal Express. In an earnings release, FedEx called Federal Express “a single company operating a unified, fully integrated air-ground express network.” It also said FedEx Freight continues to provide less-than-truckload transportation services as a separate subsidiary.
“Federal Express and FedEx Freight now represent the company’s major service lines and constitute its reportable segments,” the company said.
Close to half (940) of retailers in the Top 2000 use FedEx as a shipping carrier. The Top 2000 is Digital Commerce 360’s database ranking the largest online retailers in North America by web sales.
FedEx revenue drop in Q1
In its fiscal Q1, FedEx revenue slipped to $21.6 billion from $21.7 billion in the same period last year.
FedEx experienced “a global decline in priority volume and growth in deferred volume,” said chief financial officer John Dietrich.
That pressure was visible in two significant ways, Dietrich said:
- It constrained yield growth, with total package yield up 1% year-over-year. That’s almost 1 percentage point lower than FedEx expected, he said.
- The increase in international economy volume was the primary driver of the $124 million increase in purchase transportation expense at Federal Express.
Most popular shipping carriers among Top 2000 retailers
Subramaniam said FedEx Network 2.0 has boosted pickup and delivery efficiency. Network 2.0 is the company’s effort to “streamline” its efficiency for package pickup, transport and delivery. FedEx has seen a 10% reduction in pickup and delivery costs in markets where it has fully rolled out Network 2.0, he said.
The company also piloted a “hold-to-match” program, which it says optimizes last-mile delivery costs. It does so by holding packages that would’ve been delivered a day early when another package has been designated for a the same stop the following day, Subramaniam noted.
FedEx will do this while ensuring an on-time delivery for all packages, he explained, adding that hold-to-match is increasing stop density and will help lower our cost per package.
Dietrich said FedEx expects the timing of the Cyber 5, or “Cyber Week” — the period from Thanksgiving Day through Cyber Monday — to negatively affect the company’s fiscal Q2, as the period falls in FedEx’s fiscal Q3 this year.
FedEx Q1 results by segment
Federal Express operating results decreased due to lower U.S. domestic priority package volume as well as increased wage and transportation rates, partially offset by higher International Economy package volume, FedEx said. Federal Express revenue declined 1%. Also, Federal Express operating profit decreased $337 million year over year, Dietrich stated.
Meanwhile, FedEx Freight revenue declined 2% in Q1, even though revenue per shipment increased 2%. It attributed FedEx Freight’s operating results decreasing to a decline in weight per shipment and reduced priority shipments, each of which fell 3% in Q1.
Additionally, for FedEx Freight, “while operating profit was down $43 million, nearly half this decline was due to one fewer operating day,” Dietrich told investors.
FedEx investment in artificial intelligence (AI)
On Sept. 5, FedEx announced “a strategic alliance and investment with Nimble, an AI robotics and autonomous e-commerce fulfillment technology company.” The investment will help to scale FedEx Fulfillment with Nimble’s “fully autonomous” third-party logistics (3PL) model, FedEx said in the announcement.
“FedEx Supply Chain will use Nimble’s cutting-edge fulfillment systems to streamline our operations, further penetrate the global ecommerce market, and unlock new opportunities for customers,” Subramaniam told investors.
New FedEx general counsel and secretary
Gina F. Adams begins her role as FedEx executive vice president, general counsel and secretary on Sept. 24. FedEx announced Aug. 29 that she would become the general counsel-elect on Sept. 1. Adams succeeds Mark R. Allen, who the company said is moving to a senior advisor role until he retires Dec. 31.
Adams’ role is to oversee all legal, security and government affairs activities around the world for FedEx and its subsidiaries, the company said. She joined the company in 1992 as a managing attorney for International Regulatory Affairs.
“Gina has played a central role in addressing many of the most important issues facing our company and advocating for policies that support our customers and our industry,” Subramaniam said in an Aug. 29 statement. “I know her expertise and insights will be invaluable as a member of the FedEx Executive Committee, and she will lead our world-class legal, government affairs and security teams in navigating complex environments as we transform FedEx for the future.”
Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.
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