FedEx Freight Gains Pricing Power, Turns Quarterly Profit

FedEx Freight Gains Pricing Power, Turns Quarterly Profit

FedEx Freight returned to profitability in its last quarter after completing the merger of its long-haul and regional less-than-truckload operations.

The nation’s largest LTL carrier reported a $42 million operating profit for the quarter that ended May 31, compared with a $36 million loss a year ago.

In the previous quarter, FedEx Freight lost $110 million. FedEx’s industrial trucking unit has lost more than $500 million over the last 10 quarters.

For the full year, FedEx Freight’s revenue rose 14 percent to $4.9 billion. However, the carrier’s fiscal 2011 operating loss also rose 14 percent to $175 million.

The next largest LTL operator is YRC Worldwide, which reported $4.3 billion in revenue last year. Con-way Freight had $3.1 billion in revenue in 2010.

FedEx Freight struggled during the recession after purchasing a long-haul LTL carrier, Watkins Motor Lines, and engaging in a fierce LTL price war.

The carrier’s recovery follows the merger of FedEx’s two LTL networks, FedEx Freight and FedEx National LTL, formerly Watkins, completed in January.

The recovery also reflects a yield improvement effort at FedEx Freight, which culled low-priced or unprofitable freight gained at deep discounts from its network.

The LTL operator increased yield 13 percent year-over-year, including fuel surcharges, in the last quarter, and 11 percent the previous quarter.

Net of fuel surcharges, FedEx Freight’s yield increased 9 percent from a year ago. The company’s LTL yield has improved for four consecutive quarters.

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