FedEx, one of the leading shipping companies, has reported a nearly doubled quarterly profit as a result of rate hikes and an increase in e-commerce shipments. The company’s adjusted net income for the fiscal second quarter reached an impressive $1.30 billion, compared to $660 million in the previous year. This significant growth in profit was accompanied by a 19% increase in revenue, totaling $20.6 billion.

In response to the surging demand for deliveries during the pandemic, FedEx, along with its main competitor United Parcel Service, implemented surcharges and price increases to protect their profits. These strategies have proven successful as both companies handle unprecedented volume levels, including the usual holiday shipping peak.

FedEx’s subsidiary, FedEx Ground, which includes major e-commerce client Walmart, experienced a substantial 29% increase in average daily package volume during the quarter ending on November 30, reaching a total of 12.3 million packages. Furthermore, the revenue per package rose by 7% to $9.42, contributing to the company’s overall strong performance.

Despite the impressive financial results and the nearly doubled stock value over the past year, with shares in FedEx almost doubling, there was a slight decline of 3.4% to $282.55 in after-market trading.

Refinitiv data had projected earnings of $4.01 per share and revenue of $19.5 billion for the quarter. However, FedEx exceeded these expectations. The CFO of FedEx, Michael Lenz, mentioned that although the overall environment remains uncertain, he remains hopeful for earnings growth in the second half of fiscal 2021, primarily due to the anticipated heightened demand for their services.

The thriving e-commerce industry and the consistently high demand for deliveries indicate that FedEx and other shipping companies will continue to benefit. The success of their rate hikes and pricing strategies will likely bolster profits further, enabling them to meet the growing demands of online shoppers worldwide.

Useful links:

1. FedEx Official Website
2. United Parcel Service Official Website