FedEx Corp. expects domestic express package volume at FedEx Express to decline 4.4 percent for March compared with the same period last year. The company also projects a 5 percent increase for FedEx International Priority for March and 6 percent growth for FedEx Ground compared with the year-ago period.
The March numbers may be indicative of a faltering fourth quarter, which began March 1, FedEx said earlier this month.
“Our previous volume forecast for the fourth quarter was for U.S. domestic express package volume to decline 1 [percent] to 2 percent, and IP and ground volumes to each grow 5 [percent] to 7 percent in the fourth quarter,” said Alan B. Graf Jr., executive vice president and chief financial officer. “Economic conditions have deteriorated more than we anticipated, which is adversely impacting our volumes.”
He added that the company expects to earn less than the 85 cents to 90 cents a share forecast earlier.
FedEx is focusing on domestic growth by leveraging the FedEx brand and single-source selling of its air and ground product offerings and by leveraging its global air network to drive further growth in international use.
FedEx also is trying to improve financial returns through partnerships that allow it to achieve better use of its assets. One such partnership is a deal with the U.S. Postal Service that began in January and allows FedEx to transport USPS' Express Mail, Priority Mail and First-Class mail.
FedEx also is focusing on partnerships that allow it to extend its service offering without adding significant costs, such as its agreement with Chronopost International, the parcels and logistics holding company of France's La Poste Group. The agreement, which began in January, gives Chronopost access to the FedEx air network, while FedEx customers in several key markets will benefit from the European ground infrastructure of Chronopost for the final delivery step in parts of France.
“Our sense is that FedEx has very solid growth strategies and plans to improve financial performance,” said Edward M. Wolfe, a transportation analyst at Bear Stearns & Co., New York. “But strong execution is required for success in these plans.”
The company also announced that it plans to offer qualifying customers an enhanced level of shipment visibility through FedEx InSight, a Web-based application that broadens the amount of real-time status information on inbound, outbound or third-party shipments without having to enter a package-tracking number.
According to FedEx, InSight customers will be able to create a customized view of shipment information or request to be notified via e-mail or fax of critical shipping events as they occur during transit. These features will allow customers to plan their operations more efficiently.
FedEx InSight has been under development since 1999, and customer tests have been in progress for about a year.