Ground segment riding the e-commerce wave
Ground division is expected to thrive on the back of e-commerce sales growth. According to FedEx, online shopping the world over could reach $1 trillion by 2016, indicating that there’s a huge potential for FedEx to up its sales through online shopping. The effect could clearly be seen in the fourth quarter with revenue rising 8% over the year ago period to $3.01 billion, mainly fueled by e-commerce.
Express looking up
The Express segment’s operating margin has been rising steadily in the past few quarters, which is very encouraging because it shows that the company’s cost cutting plans are bearing fruit. Aided by lower pension costs, operating margin inched up to 6.8% in the fourth quarter from an adjusted 6.6% in the same period the previous year. Express revenues were also up 2% due to higher volume and yields.
The courier behemoth is concentrating its investment, acquisitions, and specialized services in those regions where business is showing signs of growth. The European market has a huge potential for FedEx to tap into. In less than three years, FedEx Express has unveiled 100 stations, on-boarded 3,600 employees, and started intra-country services in 13 countries for increasing its footprint across the continent.