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FedEx Corp FDX

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Residential Package Growth Still Very Strong in FedEx's Q3, Yields Surge on Constrained Capacity

Matthew Young, CFA Equity Analyst

Analyst Note

| Matthew Young, CFA |

FedEx’ fiscal third-quarter 2021 (ended February) top line continued its robust growth trajectory, rising 23% year over year, well above our anticipated run rate (across all segments) and ahead of last quarter’s 19% increase. Simply put, the pandemic has accelerated the broader e-commerce shift, driving a massive surge in residential package-delivery demand, especially for Ground, which posted 25% average daily volume growth. Express’ B2B activity is recovering in the U.S. and progressing in Europe, and constrained airlift capacity continues to support strong international-priority volumes (up 41%). Freight’s LTL shipments and yields are benefitting from heavy retail-shipper restocking and abundant spillover truckload freight.

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Company Profile

Business Description

FedEx pioneered overnight delivery in 1973 and remains the world's largest "express" package provider. In its fiscal 2020 (ended May 2020), FedEx derived 51% of revenue from its express division, 33% from ground, and 10% from freight; its asset-based less-than-truckload shipping segment. The remainder comes from other services, including FedEx Office, which provides document production/shipping and FedEx Logistics, which provides global forwarding. FedEx acquired Dutch parcel delivery firm TNT Express in 2016. TNT was previously the fourth-largest global parcel-delivery provider.

942 South Shady Grove Road
Memphis, TN, 38120
T +1 901 818-7500
Sector Industrials
Industry Integrated Freight & Logistics
Most Recent Earnings Feb 28, 2021
Fiscal Year End May 31, 2021
Stock Type Cyclical
Employees 506,000