FedEx saw boost from rival UPS's labor negotiations with Teamsters

The threat of a strike at one competitor and the bankruptcy of another proved beneficial for FedEx this summer.

Overall, adjusted earnings for FedEx's fiscal first quarter were $4.55 a share, up from $3.44 a share this time last year. The company raised its earnings-per-share guidance for fiscal 2024 to a range of $17.00 to $18.50 from $16.50 to $18.50, though on a call with analysts, FedEx's chief customer officer, Brie Carere, said overall demand is "muted" and the macroeconomic picture "is a little bit softer."

"We came into the quarter determined to provide excellent service to our customers. Despite the industry dynamics, we achieved that goal," FedEx CEO Raj Subramaniam said. "As a result, we are well positioned as we prepare for the peak season."

The shipping company said its businesses saw a boost from UPS's negotiations with the Teamsters Union and Yellow Corp.'s implosion during the quarter.

FedEx reported that its Express division, which delivers time-sensitive packages, saw operating income increase 18% during the quarter, though revenue declined 9%. For the company's Ground division, which is its low-cost shipping service, the company reported that operating income grew 59%. FedEx attributed the significant income jump partly to cost reductions and greater efficiency.

Though the Teamsters Union and UPS agreed on a contract earlier this summer and avoided a potentially damaging strike, Carere said FedEx won over customers in its Express and Ground divisions from its chief rival amid the uncertainty of the negotiating process.

"We onboarded new customers who valued our service, and were committed to a long-term partnership with FedEx," she said on the company's earnings call Wednesday. "As a result, we added approximately 400,000 in average daily volume by the end of the first quarter."