How FedEx went from big losses to a major win

In September 2022, FedEx released its end-of-quarter earnings report, revealing lower-than-expected revenue. Investors were swift to act, and in a single day, its stock dropped 21%.

In the following months, the carrier revealed several cost-cutting efforts (including a reduction in flights, salary cuts, and ending Sunday deliveries in some locations) and a dynamic pricing infrastructure that resulted in a swift turnaround despite a drop in e-commerce sales.

Just last month, FedEx beat Wall Street estimates of per-share earnings of $2.71 from sales of $22.7 billion when it reported $22.2 billion in sales, resulting in earnings of $3.41 per share. The company showed confidence in a continued upward trend by announcing that it would increase its annual payout to shareholders by 44 cents for a quarterly dividend of $1.26 a share.

Big news for FedEx Express, Ground, and Services

Just a few months ago, FedEx reported that its Ground revenue fell approximately $300 million below its projections for the first quarter. Since then, the carrier has been busy identifying failures in the system and crafting a new plan for success. After announcing its dividend increase, FedEx reported that it would consolidate its Express, Ground, and Services to drive efficiencies. This is just one move in the shipping giant’s DRIVE strategy to cut $4 billion in cost by the fiscal year 2025.

In the past, a Ground driver and an Express driver might have made stops at the same home or business on the same day. With all delivery networks under one umbrella, the company aims to reduce repetitive visits, saving labor and fuel costs. For clients using FedEx’s less-than-truckload service, nothing will change. The LTL network will remain separate, as the freight typically travels shorter distances, and the business primarily serves industrial clients.

Will FedEx’s consolidation affect your shipping strategy?

Addressing the organizational change, FedEx CEO Raj Subramaniam stated, “This organizational evolution reflects how we represent ourselves in the marketplace—focused on flexibility, efficiency, and intelligence.” If anything, the new corporate structure should reduce redundancies and streamline shipping. The elimination of multiple drivers on the same route will certainly save FedEx money. Will it save you money, too?

If you’re paying too much for shipping, ShipRx can help. Through parcel audits and parcel rate negotiations, we help our customers spend less on every shipment and maximize the refunds they’re owed. It’s free to get started, so get in touch today and make sure FedEx isn’t the only one saving money with this new strategy.

James Founding Partner