William B. Cassidy | Mar 17, 2011 12:44PM EDT
FedEx Freight lost $110 million in its most recent quarter, despite an 11 percent improvement in yield as sales increased and truck shipments declined.
The merger of next- and second-day less-than-truckload carrier FedEx Freight and long-haul FedEx National LTL accounted for $43 million of the operating loss.
Daily LTL shipment volume dropped 6 percent in the quarter that ended Feb. 28, depressed by the culling of less profitable freight and severe winter weather.
Revenue per hundredweight or yield -- a measure of pricing -- rose 11 percent, boosted by higher rates and FedEx-wide yield management initiatives.
Total LTL revenue rose 8 percent to $1.1 billion for the quarter. FedEx expects the LTL unit to return to profitability in the fourth quarter.
The industrial trucking unit fared worse than FedEx's ground package and air express divisions, but the company is optimistic about its post-merger prospects.
"We are very pleased with the execution of the new FedEx Freight strategy," said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer.
FedEx Freight is the largest U.S. LTL carrier, with $4.8 billion in revenue in the previous four quarters. The carrier is struggling to recover from a pricing war in the recession that increased market share but contributed to steep losses.
The carrier lost $91 million in the quarter that ended Nov. 30 and $153 million in its previous fiscal year. It has lost $537 million in the last nine quarters.
A streamlined FedEx Freight was launched Jan. 30 with an LTL network based on priority and economy shipping options, rather than long-haul and regional.
The merger is expected to cost FedEx $130 million in the fiscal year ending May 31.
-- Contact William B. Cassidy at wcassidy@joc.com.
