FedEx Express

Following the news that UPS has been awarded what it labeled a “significant air cargo contract” by the United States Postal Service (USPS), which used to be handled by its biggest competitor, FedEx, there has been no shortage of feedback and opinions on the development.

Atlanta-based global freight transportation and logistics services provider UPS said earlier today it has been awarded what it labeled a “significant air cargo contract” by the United States Postal Service (USPS). UPS officials said that this contract takes effect immediately while also expanding the existing relationship between UPS and USPS. And the company added that after a transition period, UPS will be the primary air cargo provider for USPS, moving the majority of USPS’s United States air cargo.

The current state of the business relationship between Memphis-based freight transportation and logistics services provider FedEx and the United States Postal Service (USPS) received a fair amount of attention on the former’s fiscal second quarter earnings call late last year.

Quarterly revenue—at $22.2 billion—was down 2.6% annually, and operating income—at $1.42 billion—increased 14.8%. Net income, at $1.01 billion, topped the $820 million recorded for the same quarter a year ago. Adjusted earnings per share came in at $3.99, up 20% annually while falling short of Wall Street expectations, at $4.19.

ALPA said that the pilots rejected the deal by a 57% to 43% margin. And as for next steps, it added that it expects the National Mediation Board to convene a status conference with the pilots and FedEx, with the caveat that there is no time requirement for this to occur.

Forward progress remains intact in labor negotiations between Memphis-based global freight transportation services provider FedEx and pilots at the company’s FedEx Express subsidiary represented by the Air Line Pilots Association (ALPA), following a tentative agreement reached between the parties late last month.

FedEx officials declined to comment on the agreement, outside of a brief statement issued by the company on May 30, which stated: “We are pleased to have reached a tentative agreement with our pilots as we continue delivering outstanding service to our customers around the world.”

FedEx described this consolidation as a phased transition that will subsequently bring nearly all of its operating companies—FedEx Express, FedEx Ground, FedEx Services, as well as other FedEx operating companies—into Federal Express Corporation, and transition into what it called a single company operating a unified, fully integrated air-ground network. And it also noted that its less-than-truckload subsidiary, FedEx Freight, will remain as a standalone operation within Federal Express Corporation.  

Quarterly revenue—at $22 billion—increased 6% annually, and operating income—at $1.23 billion—fell 17.4% annually, with adjusted net income—at $905 million—falling 23.9%. Diluted earnings per share—at $3.44—was down 21.3% and short of Wall Street estimates of $5.48.

FedEx Express has expanded its FedEx International Connect Plus (FICP) offering to four Asia Pacific, Middle East, and Africa (AMEA)-based region, including: Indonesia, New Zealand, the Philippines, and Vietnam.

A major part of this United States-based partnership centers around FedEx Express developing plans to test Elroy Air’s Chaparral autonomous air cargo system within FedEx Express’s middle-mile logistics operations and move shipments between sortation locations. The companies have been collaborating going back to January 2020.

A customer service advisory issued earlier today by Memphis-based global freight transportation and logistics services titan FedEx stated that the company is again dealing with service disruptions, as was the case earlier this year.

Entitled FedEx International Priority, company officials said that this service provides AMEA shippers with the flexibility to schedule delivery by 10:30 AM to select global destinations. And FedEx added that with FedEx International Priority, the company now provides a wider range of time-definite international shipping options for customers.

Quarterly revenue—at $23.5 billion—was up 14% annually, and operating income—at $1.6 billion—rose 9% annually. Diluted earnings per share—at $4.83—were flat, exceeding of Wall Street expectations of $4.28.