FedEx Freight Loss Leaps 81 Percent

FedEx Freight’s losses nearly doubled in the quarter ending Feb. 28, despite a surge in revenue and shipments in the three-month period. The rising loss was attributed to highly discounted pricing in the trucking market and higher purchased transportation costs.

An 84 percent increase in purchased transportation costs accounted for $87 million of FedEx Freight’s $107 million loss. Without that increase, its loss would have been $20 million -- a 66 percent improvement over the $59 million loss last year.

The increase in purchased transportation came as more freight flowed into FedEx Freight’s network. Its revenue increased 14 percent to $1.04 billion. FedEx Freight handled 26 percent more shipments per day, moving 83,400 shipments on average.

But its average revenue per hundredweight for the quarter dropped 8 percent to $16.82, lower even than its $17.24 average for the past nine months. That’s a sign of how aggressive discounting was in the LTL market in the last weeks of 2009.

FedEx Freight, which also operates FedEx National LTL and FedEx Custom Critical, was one of several large LTL carriers engaged in a price war targeting the largest U.S. LTL operator, YRC Worldwide, in the last months of 2009.

While that price battle may have weakened YRC, it didn’t knock the company out of business, and left many of its competitors, including Con-way Freight and FedEx Freight, with more freight, bigger market share and bigger losses on their books as well.

Five of the top six publicly owned LTL carriers reported losses last year. Many have stepped back from deep discounts and are working to improve yield, account-by-account. “FedEx and Con-way have definitely abandoned their get Yellow out of business pricing; that’s gone,” said one shipping industry executive who requested anonymity.

FedEx Freight and FedEx National LTL “are aggressively pursuing opportunities to increase yields,” the company said in a statement.

Contact William B. Cassidy at wcassidy@joc.com.