FedEx Corporation – Company Strategy & Performance Analysis

FedEx provides a comprehensive suite of services such as transportation, e-commerce, and business services through its group of companies. The company offers integrated business applications through operating companies under its FedEx brand. It provides time certain delivery services and international trade services such as customs brokerage, and global ocean and air freight forwarding. The company classifies its business operations into five reportable business segments, namely, FedEx Express, TNT Express, FedEx Ground, FedEx Freight and FedEx Services. FedEx Express accounted for 57% of the company’s total revenue in FY2016, followed by FedEx Ground with 30%, FedEx Freight with 10%, and FedEx Services with 3%.

MarketLine Premium’s company strategy reports provide in-depth coverage of the performance and strategies of the world’s leading transport and logistics companies. The report details company operations in key geographies and offers a comprehensive analysis of each firm’s growth strategy and financial performance. The reports benchmark company performance via key indicators, including air freight revenue, sea freight revenue, air freight volume, sea freight volume, operating income, net income, Total revenue.

Key Highlights

Improving base yields and inclusion of TNT Express contribute to growth in FedEx Express segment

The revenue of the FedEx Express segment increased from US$26,451.0m in FY2015 to US$34,742.0m in FY2016 at a rate of 31.3%. This was primarily attributed to the improved base yields and package volume growth. In addition, higher fuel surcharges and the inclusion of the TNT segment also contributed to the increase in revenue. This was partially offset by unfavourable exchange rates and fewer operating days in the year. The company aims to adopt advanced technologies, which helped to improve its operating income from US$1.2bn in FY2016 to US$1.5bn in FY2019. The company is undertaking various aircraft fleet modernization programs to add newer, more fuel-efficient, and technologically advanced aircrafts.

Growth in the yield and volume drives the revenue of FedEx Ground segment

FedEx Ground segment revenues increased from US$16,574.0m in FY2015 to US$18,075.0m in FY2016 at a rate of 9.1%. The segment accounted 30.0% to the overall revenues. The increase is attributed to growth in yields and volumes. This was partially offset by fewer operating days. FedEx Ground yield increased by 5% in FY2016, a result of higher base yields for residential services and commercial business. Continued growth in commercial business and residential services, led to an increase in average daily volumes by 5% in FY2016.

Higher average daily LTL shipments and higher LTL revenue per shipment contributes to the growth in FedEx Freight segment

The revenue of the FedEx Freight segment increased from US$6,200.0m in FY2015 to US$6,443.0m in FY2016 at a rate of 3.9%. The increase was primarily attributed to higher average daily Less-Than-Truckload (LTL) shipments and higher LTL revenue per shipment. Average daily LTL shipments increased by 3% in FY2016 due to higher demand for LTL service offerings. LTL revenue per shipment increased by 1% due to higher base rates and fuel surcharges. However, this was partially offset by lower weight per shipment.

Scope

– Company Snapshot – Details key indicators and rankings of Fedx in terms of revenue, air freight volume, ocean containers and total warehouse space.

– Company SWOT Analysis – Outlines Fedx's strengths, weaknesses, and opportunities and threats facing the company.

– Growth Strategies – Provides an overview of Fedx’s corporate goals and strategic initiatives and evaluates their outcomes.

– Company Performance and Competitive Landscape – Analyses the company’s performance by geographical segment and provides a peer comparison on parameters such as revenue and market share.

– Key Developments – Showcases Fedx's recent corporate events and initiatives.

– ICT Spending Prediction – Details how the company allocates its ICT budget across the core areas of its business, specifically hardware, software, IT services, communications and consulting.

Reasons to buy

- How does Fedx ranks among its peers in terms of revenue and market share?

- What are Fedx's main growth strategies and how successful has the company been at implementing them?

- How has the company performed since 2014?

- How has Fedx performed in comparison to its main competitors?

- What are Fedx’s strengths and weaknesses and what are the opportunities and threats it faces?

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