Air cargo facing drastic changes: Smith

FedEx founder Fred Smith said that global freight business would see some drastic changes in the future – not only will air cargo carriers face competition from ocean freight, but customers will look for customised door-to-door delivery options.


Air cargo facing drastic changes: Smith


FedEx founder Fred Smith said that global freight business would see some drastic changes in the future – not only will air cargo carriers face competition from ocean freight, but customers will
look for customised door-to-door delivery options.

Speaking at a post-earnings conference, Smith said that the traditional airport-toairport business “is not growing”, while “the door-to-door express segment is growing, and the movement of goods on the water is growing”.

FedEx’s international priority airfreightshipping volume fell three per cent in its fiscal fourth quarter that ended on 31 May, while its US domestic express volume fell five per cent, compared to a four per cent decline in the previous quarter.

FedEx is planning to disclose a “comprehensive programme” in October to cut costs and better align its express air fleet with anticipated market demand, Smith said, although he did not elaborate. FedEx said that earnings for its fiscal fourth quarter slipped 1.4 per cent, amid the volume declines in its big expressshipping business and a US$134 million charge to retire aircraft because of sluggish domestic demand.

Earnings came in at $550 million, down from year-earlier earnings of $558 million. Revenue grew 3.8 per cent to $11 billion, while operating margin narrowed to 7.8 per cent from 8.4 per cent. The
company’s express-shipping business – its largest top-line contributor – saw revenue rise 2.6 per cent to $6.8 billion, while the segment’s operating profit declined by 35 per cent.