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FedEx’s Early Xmas Present: Online Ordering Surge

Most corporations throw extravagant holiday parties no matter how their recent quarters have gone, but recently, only a select few related to retail have had actual cause to rock around the Christmas tree.

FedEx announced Wednesday (Dec. 16) that its Q2 earnings were up compared to a year ago, with an additional $0.42 per diluted share. That brings fedEx up to $2.58 per including adjustments, which the company explained as a result of the cessation of legal matters with independent contractors and the imminent acquisition of and merger with TNT Express. Frederick Smith, chairman, president and CEO of FedEx, explained that although many in the retail sector forecasted a gloomy holiday shopping season, consumers still flocked to online stores and ordered plenty that needed to be shipped.

“FedEx Corp. posted solid earnings despite continued weakness in industrial production and global trade, and we are making impressive progress toward our goals to increase margins, earnings per share, cash flows, and returns on invested capital,” Smith said in a statement. “A record number of holiday shipments – fueled by the steady rise of eCommerce – are flowing through the FedEx global networks, and we greatly appreciate the dedication of our 340,000 team members around the world who are delivering outstanding service to our customers.”

The Wall Street Journal explained that FedEx’s year-to-year profits have increased by $28 million to the current mark of $691 million. However, the increase in delivery expenses for the surge in online orders has also increased the carrier’s operating costs to approximately $622 million, up 26 percent since Q2 2014.

“There’s no sign it’s going to let up,” Henry Maier, head of ground services at FedEx said during the company’s quarterly earnings call, as quoted by The WSJ.

And why would it? With increasing profits for carriers who can navigate the evolving eCommerce landscape smoothly enough to avoid shipping delays, both sides are likely rooting for each other to keep up the good work.

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