JOC Staff | Sep 17, 2009 2:07PM GMT

The Journal of Commerce Online - News Story

Effective 3.9 percent price increase comes as express, trucking revenue slide

FedEx reported a $181 million profit Thursday for its fiscal quarter ending Aug. 31 that was down 53 percent from a year ago, but the carrier also saw improving demand in its express business and announced a rate increase for expedited shippers.

FedEx said the 5.9 percent price increase for domestic and U.S. export express shipments would take effect Jan. 4, 2010, and the fuel surcharge would be reduced at the same time by two percentage points, making the rate hike effectively 3.9 percent.

FedEx saw its express revenue decline 23 percent in its fiscal first quarter compared to the same period a year ago, and the FedEx Express operating profit fell 70 percent to $104 million, largely because of declines of more than 20 percent in yield. But domestic express volume actually grew slightly and FedEx said a 4 percent drop in International Priority shipping was better than the company had expected.

Those results were offset by weakness in the FedEx Freight trucking segment, where revenue fell 27 percent and shipments per day declined 14 percent compared to last year. Both figures marked a slim improvement on the previous fiscal quarter, but yield in the LTL business fell 14 percent after an 11 percent decline in the previous three-month quarter, suggesting prices in the domestic trucking market are still falling.

But FedEx also defied the downward trends in its FedEx Ground parcel segment, where the operating profit actually grew 7 percent to $209 million and volume was almost flat, slipping just 1 percent.