FedEx Express is adding capacity in the air. It’s also putting off adding capacity in the air.
It sounds like a contradiction, but it’s also a sign of the particular economics of managing the supply of space, operating costs and yield in the express business.
The company in December announced a major aircraft deal with Boeing, purchasing 27 new 767-300 freighters that it will begin taking in 2014 and then incorporate at a rate of six per year between 2015 and 2018. At the same time, FedEx announced it would delay delivery of 11 larger 777 freighters even as the company said it would buy two more of those planes.
The net impact of all those deals, which likely were negotiated as a single interlocking agreement, will be that the company’s capacity will be static or slightly smaller in the near term and that FedEx’s fleet gets somewhat larger but far more efficient in the near term.
The 767-300s will replace MD-10s — what FedEx calls its upgraded version of the DC-10 — and get 20 percent more payload capacity, 23 percent better operating costs and 30 percent better fuel efficiency on the newer planes.
Deferring the 777s, FedEx Express President David Bronczek said, “will allow us to balance our overall international capacity to meet expected demand.”