FedEx Freight makes improvements to its Priority service

FedEx Freight the less-than-truckload subsidiary of transportation and logistics bellwether FedEx said this week that it has upgraded its FedEx Freight Priority services by making improvements to its transit standards.

FedEx Freight Priority is a fast-transit choice for reliable, time-sensitive LTL freight delivery, according to FedEx. It was introduced as part of FedEx Freight’s network configuration, which was rolled out in January 2011. Also part of the rollout was FedEx Freight Economy, a less costly choice for reliable LTL freight delivery.

A FedEx Freight spokesperson told LM that the transit time improvements for FedEx Freight Priority speed up thousands of lanes, including speeding up transit times from Rochester to Toronto, Atlanta to Tampa and Oakland to Amarillo.

“At FedEx Freight, we continuously work to enhance service to our customers,” the spokesperson said. “These changes reflect our commitment to transform LTL shipping with faster, more reliable service offerings that better meet the needs of businesses today.”

FedEx said that a market study which it commissioned that considered expedited and non-expedited LTL services with published transit standards and nationwide coverage found that FedEx Freight Priority service had the fastest published transit times of any nationwide LTL service.

“These enhancements are part of FedEx Freight’s ongoing commitment to transform LTL shipping with faster, more reliable service offerings that better fit the needs of businesses today,” said Bill Logue, FedEx Freight president and CEO, in a statement. “Our improved transit standards will benefit LTL shippers who need a speed advantage to reach their markets faster or reduce inventory carrying costs, all with the service and reliability they have come to expect from FedEx Freight.”

Earlier this month, when FedEx released its fiscal first quarter earnings results, the company said that FedEx Freight had an operating income of $90 million, which represented a 114 percent increase over $42 million from the same time frame a year ago. Revenue—at $1.4 billion—was 5 percent better than $1.33 billion a year ago, and its 6.4 percent operating margin was ahead of last year’s 3.2 percent.

As reported in LM, for the fiscal first quarter, FedEx said LTL yield rose 2 percent because of improvements in FedEx Freight Economy yields. FedEx Freight Priority and FedEx Freight Economy revenue per hundredweight was down 1 percent and up 10 percent, respectively.

And FedEx added that operating income and margin mainly went up due to profitable volume growth, higher yield, and operational efficiency improvements. Even with the various quarterly gains, composite weight per LTL shipment—at 1,150 pounds—dipped 1 percent.

On the earnings call, Logue said FedEx was “very pleased” with Freight’s quarterly performance.

“A lot of the focus we have is on making sure that…the customer’s embracing our new offering in choice, and that’s clear,” he said. “And our objective is to make sure that whether customer picks a priority or economy shipment in any length of haul, that we’ll be profitable.

Logue added that the current pricing environment for LTL is rational, explaining that yield is an important focus and the FedEx Freight sales team is doing a nice job of managing the market environment.

In June, FedEx Freight announced a 6.9 percent general rate increase (GRI), which took effect July 9. FedEx officials said in June that this increase will apply to FedEx Freight shipments within the contiguous United States between the contiguous U.S. and Canada and within Canada. And it added that the rate for cross-border FedEx Freight shipments between the U.S. and Canada will also increase 6.9 percent for the U.S. portion for the U.S. portion of the shipment and will also take effect on July 9.