FedEx Corporation (NYSE:FDX) Q3 2024 Earnings Call Transcript

Brie Carere: I think from a peak perspective, we’re really pleased with how we’re managing peak from a service, from a customer and from a profitability perspective. First and foremost, the team starts literally now for this coming peak. And what do I mean by that? We are already talking to customers about what their peak requirements are for next year. And so that John and Scott have advanced planning. And then, of course, as we get closer to peak, we take the top 100 customers and we are managing forecast on a weekly basis. I think some of the integrated planning that we are doing with Dataworks is also incredibly helpful so that we have real time information. We’re not waiting for spreadsheets should be passed over, but we’ve actually got real time visibility into some of our largest customers, which has been incredibly helpful.

So I don’t anticipate us doing much different this year but more of the same. And again, I also was really pleased with the peak surcharge capture. We are ensuring that the customers that really drive the investment we need in December we’re getting recruited for that cost. So we feel good.

John Dietrich: And I’ll speak to the Ground piece. And I think one of the drivers of the margin expansion and cost control at Ground was lower line haul expense that I alluded to. And we moved a lot of high cost and ad hoc external line-haul spend into our scheduled network. And as a result, achieved lower rates on the planned line haul purchase transportation. And this is all part of a broader optimization and ongoing optimization that’s taking place in the network through DRIVE and through Network 2.0. And so every aspect and even those first and last mile will be part of that. And we’re also leveraging the capacity that we have. And we do have some additional capacity in the ground network that can absorb additional volumes at no incremental cost. So that should help improve margins as well.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Raj Subramaniam for any closing remarks.

Raj Subramaniam: Thank you, operator. In closing, we saw continued operating income growth, margin expansion despite lower revenue for the third consecutive quarter, and this is clear evidence that DRIVE is working. While these results are encouraging, it is our top priority to maintain momentum and continue to transform our network and the way we work. Once again, let me thank our FedEx team members for their hard work and dedication to delivering outstanding customer service. I’m really proud of the work that we have accomplished as we continue to build the world’s most flexible, efficient and intelligent network. Thank you for your time and attention today.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.