FedEx Revenue Growth To Slow?

FedEx Corporation (NYSE: FDX) generates its revenue from a broad range of transportation, e-commerce, and business services, which can be clubbed under three segments – FedEx Express, FedEx Ground, And FedEx Freight. In this note we discuss the company’s business model, revenue growth in the recent years, and our view on future growth. You can look at our interactive dashboard analysis ~ FDX Revenues: How Does FedEx Make Money? ~ for more details. In addition, you can see more of our data for industrial companies here.

• FedEx Express is the world’s largest express transportation company, offering delivery to more than 220 countries.
• FedEx Ground is a small-package ground delivery services provider, and it operates in the U.S. and Canada.
• FedEx Freight is a provider of less-than-truckload (“LTL”) freight services across all lengths of haul.
• Note that the segment revenue figures in this dashboard are adjusted for eliminations, corporate & others, and FedEx Services, which refers to sales, marketing, information technology, communications, customer service, technical support, billing and collection services, provided to support FedEx’s overall transportation business.

FedEx’s Business Model

• What Need Does It Serve?
  • FedEx is primarily involved in the delivery of packages worldwide. Its services are used by retail customers and businesses to deliver documents, and goods. It covers 220 countries.
• Who Pays To FedEx?
  • Consumers and businesses across the globe. FedEx Ground services, though, are available only for consumers and businesses in North America.
• What Are The Alternatives To FedEx
  • Within package delivery service providers, other alternatives are UPS, and DHL, among others.
  • Other alternatives are the public postal services, such as United States Postal Services, and Royal Mail UK, among others.

FedEx’s Total Revenue Has Grown In Low Double-Digits Since Since 2016, But The Growth Rate Could Slow In The Near Term.

• FedEx Corporation’s total revenues grew from $50.4 billion in fiscal 2016 to $69.7 billion in fiscal 2019.
• This represents an average annual growth rate of 11.6%.
• We forecast the revenues to be around $75.5 billion by fiscal 2021, reflecting an average annual growth rate of 4.1%.

Revenue Growth Over The Next Two Years Will Likely Be Driven By An Increase In Ground And Freight Volume, As Well As Higher Pricing.

• FedEx Express revenue has grown from $27.1 billion in fiscal 2016 to $39.8 billion in fiscal 2019.
• This growth was primarily driven by higher packages shipped, which increased from 1.4 billion in fiscal 2016 to 2.1 billion in fiscal 2019, partly offset by a decline in average revenue per package from $19.70 to $18.40 during the same period.
• This can be attributed to the acquisition of TNT Express in 2016.
• Looking forward, volume and pricing could see slight growth, resulting in revenues of $40.0 billion by fiscal 2021.

• FedEx Ground revenues have grown from $17.0 billion in fiscal 2016 to $21.9 billion in fiscal 2019.
• This growth was primarily driven by higher packages shipped, which increased from 2.2 billion in fiscal 2016 to 2.4 billion in fiscal 2019, as well as a growth in average revenue per package from $7.80 to $9.00 during the same period.
• Looking forward, the volume growth could continue in mid-to-high single-digits while pricing could grow to $9.10 per package.
• This can be attributed to the growth in e-commerce, which has led to higher demand for shipments, and this trend will likely continue in the near term.

• FedEx Freight revenue grew from $6.3 billion in fiscal 2016 to $8.1 billion in fiscal 2019.
• This can be attributed to growth in freight shipments, which increased from 27.3K in fiscal 2016 to 29.3K in fiscal 2019, while weight per shipment hovered around 1.2 lbs in the recent years. Average revenue per lbs increased from $0.20 to $0.23 during the same period.
• Looking forward, volume and pricing could see a slight uptick, resulting in segment revenues of $9.6 billion in fiscal 2021.

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