FedEx profitable but labor issue persists

Dec. 20, 2006
FedEx Corp. today reported its earnings per diluted share in the quarter ended November 30 increased 7.2% to $1.64 per diluted share compared with the same period last year

FedEx Corp. today reported its earnings per diluted share in the quarter ended November 30 increased 7.2% to $1.64 per diluted share compared with the same period last year.

“Package volumes are solid this holiday season, and we see continued global economic growth in 2007,” said Frederick W. Smith, chairman, president & CEO of FedEx Corp.

The FedEx Freight segment, which includes the company’s recent purchase of LTL carrier Watkins Motor Lines which had been rebranded FedEx National LTL, saw operating income increase 2% to $138 million. Operating margins declined in the quarter, due to integration costs associated with Watkins being larger than a property sales gain.

LTL shipments increased 28% year-over-year primarily due to the acquisition and demand for FedEx Freight’s regional and interregional services. Average daily LTL shipments at FedEx Freight, excluding FedEx National LTL, continued to grow in the quarter but at a slower pace each consecutive month.

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Separately, the package delivery giant has suffered a setback in keeping its company union-free. Last week the National Labor Relations Board announced that 32 drivers at two Wilmington, MA terminals have voted to join the International Brotherhood of Teamsters, The Wall Street Journal reported.

“This is a great day for these workers,” said Sean O’Brien, president of Teamsters Local 25. “I look forward to securing a first contract for these drivers that ensures that they are treated like the employees that we and the company knows that they are.”

The Wall Street Journal reported that FedEx had rolled out several initiatives to head off further unionization:

  • stationed 18 “contractor advocates” to help drivers boost shipment volumes and streamline their relations with management;
  • created an executive position responsible for contractor relations;
  • increased fuel subsidies to drivers operating multiple trucks;
  • eliminated some fines on drivers associated with customer-failed delivery claims.

To comment on this article, write to Terrence Nguyen at [email protected]

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