Against the backdrop of continued weak global demand and consumers turning to less profitable express services, global express giant FedEx has had a tough time in the first quarter of fiscal 2025, but freight demand from Asia remains one of FedEx’s biggest advantages at present
According to the financial report, FedEx’s international economy package service revenue increased by 22% to $1.4 billion in the first quarter, and freight volume increased by 35%. This shows that FedEx still has a place among many air freight companies facing low-value packages overseas.
FedEx Chief Customer Officer Brie Carere said FedEx expects export volumes in Asia to “continue to be strong” for the rest of the fiscal year. Currently, FedEx has a “very fruitful relationship” with China’s e-commerce platforms SHEIN and TEMU. However, Brie Carere did not explicitly mention the names of the two e-commerce platforms, but referred to them as “two giants.”
At present, FedEx is also very strategic in ensuring that the relationship between the two parties is mutually beneficial. Obviously, both SHEIN and TEMU are large shippers in the Asian market, and FedEx has found some small opportunities to cooperate with the overall business of these two platforms in Asia. So, FedEx is very happy with this relationship. But Brie Carere hinted that FedEx does not expect to rely on the business of TEMU and SHEIN for growth.
SHEIN and TEMU are indeed in a state of rapid growth now, and they have also contributed to the growth of the business to a certain extent, but FedEx is really focusing on the part of SHEIN and TEMU business that requires speed, or requires FedEx to provide available capacity to enter the US market. Therefore, these two platforms will not be a significant growth driver for FedEx, and FedEx does not expect these two platforms to bring significant growth.
With the contract with the United States Postal Service (USPS) expiring on September 29, FedEx continues to overhaul its global air cargo network to increase network flexibility, cut costs, and achieve growth in more profitable markets.
As part of the cost-cutting “three-color” plan, FedEx expects to reduce daytime flying time by about 60%, with most of the reductions to be carried out in October. Despite the reduction in flights, FedEx could benefit from more air cargo volume if strikes occur at ports along the U.S. East Coast and Gulf Coast. “In my experience, any time there is a disruption at a port, it’s usually good for air freight,” said John Dietrich, FedEx’s chief financial officer.
