FedEx has become more aggressive in pricing. Higher shipping rates and fuel surcharges helped boost revenue at its ground shipment unit. Fred Katayama reports.
More people buying more things off the web boosted ground shipments at FedEx, and that helped lift quarterly profit 24 percent at the package delivery company. Volume grew six percent at its ground segment, FedEx's biggest source of profit, and the higher shipping rates and fuel surcharges drove revenue up eight percent in that unit. Revenue rose at FedEx's two other segments as well ... thanks to higher U.S. demand for overnight express shipments and an even sharper rise in demand for priority service. FedEx has become more aggressive in pricing. Earlier this year, FedEx upped its rates for shipping items that were bulky in size but light in weight. Just yesterday, the company boosted shipping rates for express, ground and freight almost five percent effective January. The earnings results sent FedEx's high-flying stock even higher. Its 41 percent return over the last 12 months is double that of the S&P 500 and four times that of archrival UPS. Looking ahead, the company says it is sticking to its 2015 profit range forecast. Cowen senior analyst Helane Becker said, "The consensus will likely trend to the higher end of guidance on the first quarter earnings beat alone."