As of January, FedEx Corp. has seen its volume of shipments grow to more than 110 million every day — more than 40 billion packages every year. The company has handled the surge thanks to planning for the growth several years ago, even though they didn’t expect these numbers for four more years.
Still, FedEx’s stock slid about 5% in early trading Friday (March 18), after the company reported a weaker-than-expected Q3 growth, from $21.5 billion to $23.6 billion, in its quarterly earnings call Thursday (March 17), as the pandemic led to workers calling in sick and customers cutting demand early in 2021.
In a MarketWatch report, JP Morgan analysts said they were surprised that FedEx’s fuel surcharge had not given the delivery giant bigger earnings. FedEx had said the surcharge provided a “significant benefit” to its operating income.
“This tailwind will continue in F4Q22 as FedEx just raised its surcharge tables again effective April 4; however, we are concerned that the F3Q22 results weren’t stronger with this significant lift from fuel,” analysts noted.
FedEx leadership was more optimistic.
“Our ability to handle the influx of packages was years in the making as we’ve taken deliberate steps to enhance our unparalleled network and support of customers large and small,” said Raj Subramaniam, president and chief operating officer, in the FedEx earnings call transcript.
“We have fundamentally changed our performance as we handled increased eCommerce volume during peak and set a new precedent for peak seasons moving forward,” he said. “More than three years ago, we built upon this foundation and embarked on a strategy that positioned FedEx squarely in the center of the fast-growing eCommerce market with a differentiated portfolio and a diversified customer base.”
Brie Carere, EVP and chief marketing and communications officer, said in the call that FedEx expects eCommerce “will continue to drive strong parcel market growth.
“We believe the eCommerce growth rate in the United States will be in the mid- to high single digits for the next three to four years,” she said. “We will continue to build differentiated value propositions to achieve market-leading pricing in all our customer segments, including eCommerce, our small and medium customers and our commercial B2B business.”
Carere added that in January, FedEx modernized its online shipping application, FedEx Ship Manager, which has been rolled out in more than 153 countries. She also highlighted the shipping firm’s move to enhance its tracking service using machine learning and artificial intelligence model to provide better delivery date accuracy, including updates for early or delayed shipments.
UPS will report its fiscal 2022 first-quarter earnings on April 26.
Related: FedEx, Microsoft Unveil ‘Logistics-as-a-Service’ to Meet Better Shopping and Shipping Demand
Earlier this year, FedEx and Microsoft teamed up on a cloud-based, cross-platform Logistics-as-a-Service solution for retailers, merchants and brands to improve customer engagement while also providing enhanced shipping options.
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