With its first annual profit since 2008 in the bank, FedEx Freight is moving to tighten its less-than-truckload network. The nation’s largest standalone LTL carrier will speed transit times on 6,000 lanes starting on July 9, company officials said.
FedEx Freight launched a redesigned LTL network in February 2011, shifting its focus from regional and national distribution to priority and economy service, regardless of length of haul. As volumes climb, the redesign needs tweaking.
The trucking company gained volume in its fiscal fourth quarter ending May 31 despite a slowing economy. Average daily LTL shipments and LTL yield increased 4 percent.
“The network design is really important to really move this volume efficiently through our network to put it to the bottom line,” William J. Logue, FedEx Freight president and CEO, told investment analysts in a June 19 conference call.
That 4 percent year-over-year yield increase, which reflects higher pricing and fuel surcharges, compares with a 6 percent increase in the previous quarter. FedEx Freight hopes to boost yield this summer with a 6.9 percent general rate increase.
FedEx Freight has been working to balance volume and yield since deep discounting during the recession contributed to losses totaling $372 million over three years.
The industrial freight arm of express giant FedEx rolled back into the black in fiscal 2012, posting a $162 million operating profit on a 7.1 percent increase in revenue to $5.3 billion.
In the quarter ending May 31, FedEx Freight reported an $81 million operating profit, a 93 percent increase from the year-earlier quarter. The carrier more than recovered from a $1 million loss in its fiscal third quarter, which ended Feb. 29.
Stronger pricing and higher volume pushed revenue for the quarter up 7 percent from a year earlier to $1.4 billion, with an operating ratio of 94.2 percent.