Leading freight forwarding company,
) announced increase in shipping rates by an average of 3.9% in
FedEx Freight segment. The new rates will be effective from Mar
The new rates will levy on FedEx Freight shipments within the
U.S., including Alaska, Hawaii, Puerto Rico and the U.S. Virgin
Islands. Shipments between U.S. and Canada, within Canada,
between U.S. and Mexico and within Mexico will also be charged as
per the new rates.
FedEx remains successful in implementing higher shipping
rates, which are imperative to revenue growth. Previously, the
company provided rate hikes for 2014, including a 3.9% hike in
shipping rates at FedEx Express for U.S. export and import
services, with effect from Jan 6, 2014.
In Dec 2013, the company also hiked shipping rates for FedEx
Ground and FedEx Home Delivery by 4.9% effective Jan 6, 2014. The
company also hinted at increasing FedEx SmartPost rates in the
In 2013, the company also introduced "FedEx One Rate" - a flat
rate shipping system for individual shippers and small business
entities. The company's new rate option is available on Express
packages and is backed by the FedEx Express money back
We expect these initiatives to substantially better the
company's earnings power over the next several years and provide
an edge over its peers like
United Parcel Service, Inc.
Radiant Logistics, Inc.
Expeditors International of Washington Inc.
In addition, FedEx foresees modest growth in the global
economy, driven by gradual improvements in Europe and China.
Based on this, the company remains positive over growth in real
GDP, industrial production, and consumer spending in calendar
year 2014 and 2015 in the U.S. and globally.
FedEx foresees global GDP growth of 2.8% and 3.2% for calendar
year 2014 and 2015, respectively. FedEx also assumes U.S. GDP
growth of 2.4% for calendar year 2014 and 3.0% for 2015. Further,
industrial production growth is estimated at 3.1% and 3.6% in
calendar years 2014 and 2015, respectively. The company is also
banking on new business.
Currently, FedEx has a Zacks Rank #3 (Hold).
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