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Transportation

FedEx Freight sees volumes stabilize, eyes Q4 margin improvement

Transportation via FreightWaves
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The nation’s largest less-than-truckload carrier, FedEx Freight, said Thursday that volumes have continued to stabilize and that it expects to see stronger operating leverage next year as a standalone company. Its local, dedicated LTL sales teams are seeing business wins and driving a better freight mix across the network. FedEx Freight (NYSE: FDXF) completed its spinoff from FedEx (NYSE: FDX) in June. FedEx reported financial results on Wednesday. The carrier reported four-month results (June through September) Thursday after the market closed as part of a transition to calendar-year financial reporting. Revenue in the period increased 9% year over year to $3.28 billion. Revenue per day was up 8%. Adjusted earnings per share of $2.15 were 70 cents lower y/y. The revenue increase was driven by a 9% increase in revenue per hundredweight (yield), while tonnage was level with the prior-year period. The tonnage result stemmed from a 1% decline in shipments per day, which was offset by a 1% increase in weight per shipment. Yield (ex-fuel) was up just 0.3% y/y. Revenue per shipment (ex-fuel) increased 2%. It has repriced approximately 25% of its contract business since the separation and said net revenue churn has improved. It expects both volumes and yield (ex-fuel) to increase in the fourth quarter. September marked the ninth straight month of expansion for the U.S. manufacturing complex, which is a significant source of LTL freight. FedEx Freight’s 2027 general rate increase is expected to average 6.9% and takes effect on Jan. 8. The company reported an 84.5% adjusted operating ratio (inverse of operating margin), which was 90 basis points better y/y. Guidance for the fourth quarter includes revenue of $2.3 billion to $2.37 billion, a 13% y/y increase at the midpoint of the range. Higher diesel fuel surcharges will be a primary driver of the increase. Diesel prices were 48% higher y/y in the third quarter. Adjusted operating income is expected to increase 20% y/y (at the midpoint) to a range of $185 million to $205 million. (The guide implies a 91.4% to 92% adjusted OR, 50 bps better y/y at the midpoint.) The company said it will soon decide on a dividend, and on buying back stock. It said that share repurchases would likely be executed to offset dilution as FedEx unwinds its equity position. Shares of FDXF were up 3% in after-hours trading on Thursday. Why it matters? FedEx Freight’s standalone results provide deeper context around its LTL operations and broader market trends. More FreightWaves articles by Todd Maiden: Saia’s expanded terminal network delivers record revenue, tonnage XPO’s pricing, operating initiatives drive Q3 beat Old Dominion’s tonnage turns positive; recovery needs demand inflection The post FedEx Freight sees volumes stabilize, eyes Q4 margin improvement appeared first on FreightWaves.

The nation’s largest less-than-truckload carrier, FedEx Freight, said Thursday that volumes have continued to stabilize and that it expects to see stronger operating leverage next year as a standalone company. Its local, dedicated LTL sales teams are seeing business wins and driving a better freight mix across the network.

FedEx Freight (NYSE: FDXF) completed its spinoff from FedEx (NYSE: FDX) in June. FedEx reported financial results on Wednesday.

The carrier reported four-month results (June through September) Thursday after the market closed as part of a transition to calendar-year financial reporting.

Revenue in the period increased 9% year over year to $3.28 billion. Revenue per day was up 8%. Adjusted earnings per share of $2.15 were 70 cents lower y/y.

The revenue increase was driven by a 9% increase in revenue per hundredweight (yield), while tonnage was level with the prior-year period. The tonnage result stemmed from a 1% decline in shipments per day, which was offset by a 1% increase in weight per shipment.

Yield (ex-fuel) was up just 0.3% y/y. Revenue per shipment (ex-fuel) increased 2%.

It has repriced approximately 25% of its contract business since the separation and said net revenue churn has improved. It expects both volumes and yield (ex-fuel) to increase in the fourth quarter. September marked the ninth straight month of expansion for the U.S. manufacturing complex, which is a significant source of LTL freight. 

FedEx Freight’s 2027 general rate increase is expected to average 6.9% and takes effect on Jan. 8.

The company reported an 84.5% adjusted operating ratio (inverse of operating margin), which was 90 basis points better y/y.  

Guidance for the fourth quarter includes revenue of $2.3 billion to $2.37 billion, a 13% y/y increase at the midpoint of the range. Higher diesel fuel surcharges will be a primary driver of the increase. Diesel prices were 48% higher y/y in the third quarter.

Adjusted operating income is expected to increase 20% y/y (at the midpoint) to a range of $185 million to $205 million. (The guide implies a 91.4% to 92% adjusted OR, 50 bps better y/y at the midpoint.)

The company said it will soon decide on a dividend, and on buying back stock. It said that share repurchases would likely be executed to offset dilution as FedEx unwinds its equity position.

Shares of FDXF were up 3% in after-hours trading on Thursday.

Why it matters? FedEx Freight’s standalone results provide deeper context around its LTL operations and broader market trends.

More FreightWaves articles by Todd Maiden:

  • Saia’s expanded terminal network delivers record revenue, tonnage
  • XPO’s pricing, operating initiatives drive Q3 beat
  • Old Dominion’s tonnage turns positive; recovery needs demand inflection

The post FedEx Freight sees volumes stabilize, eyes Q4 margin improvement appeared first on FreightWaves.

Source: FreightWaves

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Amazon battles freight inflation as shipping costs jump 11% in Q3 

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During the question-and-answer portion of Thursday’s earnings call, Jassy said that transportation cost pressures are expected to continue into the fourth quarter. window.googletag = window.googletag || {cmd: []}; googletag.cmd.push(function() { var gptSlot = googletag.defineSlot('/21776187881/fw-responsive-main_content-slot5', [[728, 90], [468, 60], [320, 50], [300, 100]], 'div-gpt-ad-1665767778941-0').defineSizeMapping(gptSizeMaps.banner1).addService(googletag.pubads()); googletag.pubads().enableSingleRequest(); googletag.pubads().collapseEmptyDivs(); googletag.enableServices(); setInterval(function() { if (!document.hidden) { googletag.pubads().refresh([gptSlot]); } }, 60000); }); googletag.cmd.push(function() { googletag.display('div-gpt-ad-1665767778941-0'); }); Responding to an analyst’s question about fuel and linehaul inflation, Jassy said the impact would be somewhat higher in the fourth quarter than in the third. 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Transportation

First look: TFI Truckload sparkles, but OR at LTL slips

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via FreightWaves