FedEx yesterday announced higher rates for express shipping from next January but dampenedspeculation about acquisitions in Europe, including of TNT Express.
The company announced that FedEx Express rates for US domestic and export services will go up bya net average of 3.9% as of January 3, 2011. The full average rate increase of 5.9% will bepartially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducingthe fuel surcharge by two percentage points.
In addition, FedEx Express and FedEx Ground will implement a change to the dimensional weightvolumetric divisor from 194 to 166 for US domestic services. The FedEx Ground and FedEx SmartPostpricing changes for calendar year 2011 will be announced later this year.
Meanwhile, FedEx Freight and FedEx National LTL also will implement 6.9% general rate increases(GRI) as soon as November 1, 2010. These rate increases apply to interstate and intrastateless-than-truckload (LTL) shipments, as well as shipments between the USA and Canada covered by theFXF 1000 and FXNL 501 Base Rates.
FedEx Freight’s and FedEx National’s fuel surcharge will remain unchanged and one of the lowestin the LTL industry. On average, the FedEx LTL companies’ fuel surcharge is 4.5 to 6.5 percentagepoints below the next five largest LTL carriers.
“FedEx understands the needs of our customers and is focused on providing exceptional service,”stated T. Michael Glenn, FedEx executive vice president, Market Development and CorporateCommunications. “This pricing adjustment will allow for key investments that will enable FedEx tocontinue to provide industry leading service and shipping solutions.”
Meanwhile, FedEx top executives outlined more of their strategic thinking at an investorsmeeting in Memphis yesterday. CEO Fred Smith played down speculation about a possible acquisitionin Europe, Dow Jones reported. “We don’t feel in Europe that there is a competitive danger or thatit’s essential for us to make an acquisition,” he commented. Asked about TNT, Smith said he had “noindication” that it is for sale, while CFO Alan Graf stressed that the company has “absolutely nointerest in anybody’s mail business” in Europe.
On market trends, Smith told Bloomberg that international express growth would help the companyreturn to its long-term target of an operating profit margin of 10% or higher, and reiterated thatcountries such as China, India and Brazil would continue to grow faster than the USA.
