FedEx makes big push for third-party air cargo

FreightWaves12-23 21:00

A Federal Express B777 freighter lands at Charles de Gaulle International Airport in Paris on July 11, 2019. FedEx is reallocating more cargo jets from domestic to international daytime flying in an ...

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FedEx is reallocating more cargo jets from domestic to international daytime flying in an ...</p>\n\n<a href=\"https://finance.yahoo.com/news/fedex-makes-big-push-third-130000531.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>FedEx makes big push for third-party air cargo</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nFedEx makes big push for third-party air cargo\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-23 21:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/fedex-makes-big-push-third-130000531.html><strong>FreightWaves</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>A Federal Express B777 freighter lands at Charles de Gaulle International Airport in Paris on July 11, 2019. FedEx is reallocating more cargo jets from domestic to international daytime flying in an ...</p>\n\n<a href=\"https://finance.yahoo.com/news/fedex-makes-big-push-third-130000531.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0742534661.SGD","symbol_name":"Fidelity America A-SGD (hedged)","start_time":0,"source_url":"https://finance.yahoo.com/news/fedex-makes-big-push-third-130000531.html","article_id":"2493763347","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/I59qpCF75h55_AZjc0dncQ--~B/aD02NzU7dz0xMjAwO2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/freightwaves_373/8102488cdd2a5b83d7c6037766d38ab7"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2493763347","pubTimestamp":1734958800,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"A Federal Express B777 freighter lands at Charles de Gaulle International Airport in Paris on July 11, 2019. FedEx is reallocating more cargo jets from domestic to international daytime flying in an effort to pick up heavy cargo business. . Premium international air cargo, traditionally palletized and booked by logistics companies on commercial airlines, is one of four B2B market segments parcel carrier FedEx Corp. will target for growth next year as the expiration of a large U.S. Postal Service contract frees up aircraft for other uses, company leaders say.“The airfreight market is fragmented and the shipping processes are antiquated. It’s a market ripe for disruption,” Chief Customer Officer Brie Carere said Thursday during FedEx’s second-quarter earnings briefing for analysts.FedEx is implementing a color-coded streamlining of the air network that involves segregating the fleet by product categories and demand, part of a broader corporate campaign aimed at removing $6.2 billion in a","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0742534661.SGD":"Fidelity America A-SGD (hedged)","BK4585":"ETF&股票定投概念","LU1571399168.USD":"ALLSPRING GLOBAL LONG/SHORT EQUITY \"IP\" (USD) ACC","LU0048573561.USD":"FIDELITY AMERICA \"A\" (USD) INC","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0251142724.SGD":"Fidelity America A-SGD","BK4588":"碎股","LU0310800965.SGD":"FTIF - Templeton Global Balanced A Acc SGD","BK4131":"航空货运与物流","LU1267930227.SGD":"TEMPLETON GLOBAL BALANCED \"AS\" (SGD) ACC A","LU0251131958.USD":"FIDELITY AMERICA \"A\" (USD) ACC","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","FDX":"联邦快递","LU0052756011.USD":"TEMPLETON GLOBAL BALANCED \"A\" (USD) INC"},"translate_title":"联邦快递大力推动第三方航空货运","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"FDX":1},"content_text":"A Federal Express B777 freighter lands at Charles de Gaulle International Airport in Paris on July 11, 2019. FedEx is reallocating more cargo jets from domestic to international daytime flying in an effort to pick up heavy cargo business. (Photo: Shutterstock/GB-Photographie) \n \n\nPremium international air cargo, traditionally palletized and booked by logistics companies on commercial airlines, is one of four B2B market segments parcel carrier FedEx Corp. will target for growth next year as the expiration of a large U.S. Postal Service contract frees up aircraft for other uses, company leaders say.\n“The airfreight market is fragmented and the shipping processes are antiquated. It’s a market ripe for disruption,” Chief Customer Officer Brie Carere said Thursday during FedEx’s second-quarter earnings briefing for analysts. \nThe express carrier decreased total U.S. domestic flight hours by 24% in the second quarter, primarily due to a 60% reduction in daytime flying for the Postal Service at the end of September, executives said.\nThe reduction aligns with FreightWaves reporting in July that the parcel logistics giant would reduce domestic flying time by 60% and the number of city destinations by 55%. The Postal Service last spring awarded UPS the contract, previously held by FedEx for more than 20 years, to provide domestic air cargo service.\nThe loss of Postal Service business negatively impacted two months of the quarter and the FedEx Express unit’s operating profit. Revenue loss will be felt more during the current quarter, reflecting the full handover of operations to UPS, management said. The financial impact will lessen in the fourth quarter as the company realizes cost savings from a bloated, unprofitable program under which FedEx committed more infrastructure than justified by volumes to meet Postal Service commitments. And those savings will turn into a tailwind for FedEx when the new fiscal year begins in June.\nMemphis,  Tennessee-based FedEx reported consolidated revenue dipped 1% to $22 billion, with adjusted operating income falling 3%, during the fiscal year second quarter ended Nov. 30. Revenue was nearly flat for the Federal Express segment, with operating profit inching up 1.6% year over year to $1 billion. \n“With the expiration of the U.S. Postal Service contract, we are strategically matching capacity with demand and flexing the network as needed to transport packages more efficiently,” said CEO Raj Subramaniam. “And we are continuing to execute on Tricolor, our international air network design strategy, which is improving density and asset utilization across the enterprise, while targeting profitable growth.”\nFedEx is implementing a color-coded streamlining of the air network that involves segregating the fleet by product categories and demand, part of a broader corporate campaign aimed at removing $6.2 billion in annual expenses and improving customer service through structural cost reductions, and consolidating separate express and ground parcel networks. The air revamp is also intended to offset declining parcel demand. \nFedEx Express has always transported a limited volume of third-party shipments as a by-product of its primary moneymaker, the overnight parcel network. Now it has developed a specific service for traditional, bulkier cargo. \nManagement previously stated it would have more flexibility to rationalize air capacity once the Postal Service commitment ended because it would no longer have to dedicate more than 100 freighter aircraft to daytime flying.\nCarere said the airfreight market offers significant growth potential for the FedEx unit.\nDaytime flying pivot to international\n“We currently have a low-single-digit market share in the $80 billion airfreight market. International priority freight already serves as a profit driver for us. Our tricolor strategy is a necessary condition to competing and winning in this market,” she said on the earnings call. “Commercially, we’ve also made numerous changes to improve our performance. We have created a dedicated sales organization, a new customer service model, and are investing in the digital experience.” \nIn February, FreightWaves reported how FedEx was gearing up to compete more aggressively for deferred cargo business that is traditionally the province of for-hire freighter operators such as Atlas Air, Cargolux and Cathay Cargo.\nFedEx is tailoring its so-called Purple network toward international parcel customers willing to pay for the fastest speed using dedicated aircraft timed to arrive overnight at FedEx hubs for next-day delivery. Fewer large freight shipments are being mixed in to maximize aircraft density and sorting efficiency on the ground.\n\n\n\nFedEx Express operates 92 Boeing 757-200 converted freighters, down from 115 at the start of the year. The company downsized the fleet in response to slower parcel demand. (Photo: Jim Allen/FreightWaves) \n \n\nOrange represents the deferred air network. It is designed to attract high-yield freight with similar characteristics to less-than-truckload freight, such as pharmaceuticals, perishables, electronics and automotive components, that is more profitable per pound than larger shipments of general goods. Flights are scheduled into primary and regional sortation centers during the daytime, when workers have more time to build dense pallets. The White network is for low-priority shipments booked on commercial passenger aircraft by FedEx’s freight forwarding arm.\nFedEx has spent 18 months building to the point of tackling the third-party airfreight market at scale. Internal communications obtained by FreightWaves early this year showed key FedEx managers viewed Tricolor as more than simply an efficiency initiative and way to deconflict priority parcels and freight shipments. It was also designed to propel Express into sectors in which it has not traditionally operated. Restructure of the international air network would allow its in-house airline to better capture containerized freight and less time-sensitive parcels, and grow revenue, they said.  \nOne memo said FedEx only has a 1% share of the $80 billion deferred air market.\nRamping up the Tricolor strategy drove higher average daily pounds and yields year over year for FedEx’s international freight product during the second quarter, said CFO John Dietrich.\nGlobal air cargo demand has grown by double digits for 11 consecutive months. Yields are about 50% higher than in 2019 and 12% year over year, primarily because of rates on westbound routes out of Asia and the Middle East to Europe and the Americas.\nFreighter capacity on key trade lanes out of Asia is currently very tight because of elevated e-commerce volumes from China and U.S.-China tensions that have limited the resumption of widebody passenger services across the Pacific Ocean. \nSome analysts have said FedEx would have a better chance at improving profits by shedding 20% to 30% of its fleet.\nIntegrated couriers like FedEx typically reserve the largest amount of freighter space for their core time-definite products and sell excess capacity to logistics providers. The risk for these shippers is that cargo can sometimes be left on the tarmac when parcels fill the express aircraft, leading to uncertainty about delivery times.\nDedicating fixed space to third-party freight would be a big change and a potential threat to other cargo airlines, experts say. Amazon, which also runs a private cargo airline to expedite e-commerce orders to marketplace customers, recently began marketing excess capacity to freight forwarders to help offset network costs.\nMany freight forwarders have been slow to adopt digital booking systems, preferring email or phone calls with airlines to arrange transportation. Moving shipments also involves multiple handoffs and information sharing among unrelated trucking companies, logistics providers and airlines. FedEx management is confident the company’s sophisticated tracking capabilities and ability to use its LTL network  to connect shippers with regional hubs will attract businesses.\nClick here for more FreightWaves/American Shipper stories by Eric Kulisch.\nRELATED READING:\nFedEx fleet restructure poses threat to freighter operators\nUPS wins air cargo contract with Postal Service, replaces FedEx\nFedEx to cut daytime domestic flight activity by 60%\nThe post FedEx makes big push for third-party air cargo appeared first on FreightWaves.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"corporation","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2493763347"}