FedEx Freight increased revenue 5 percent from a year ago to $1.4 billion as shipments rose 4 percent in the fiscal quarter that ended Aug. 30.
Profit soared 114 percent from a year ago to $90 million at the industrial freight arm of FedEx, which lowered its profit forecast for its new fiscal year.
That built on gains FedEx Freight made in the quarter that ended May 31, when its operating profit increased 93 percent year-over-year to $81 million.
The nation’s largest less-than-truckload carrier said higher demand for its economy service offering in all lengths of haul drew more freight to its LTL network.
The carrier’s operating margin improved to 6.4 percent, giving the division a 93.6 operating ratio for the June-to-August quarter, the first of FedEx’s fiscal year.
The LTL operator increased its yield, a measure of pricing, 2 percent year-over-year. Yield increased at a slower rate than the previous two quarters, when it rose 4 and 6 percent, respectively.
Slower growing yield could point to a shift or an influx of freight to the division’s lower-priced economy service rather than its priority service.
FedEx Freight shrank and reorganized its LTL network last year to reflect priority and economy services offered in all lanes and all lengths of haul.
FedEx as a whole noted a shift to its deferred service offerings this summer as the global economy slowed, dampening international and U.S. express demand.
U.S. domestic average daily package volume at FedEx Express declined 5 percent, though higher rates boosted domestic revenue per package 2 percent.
FedEx Ground average daily package volume grew 5 percent, and revenue per package also was up 2 percent on higher rates, the company said Tuesday.