TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

FedEx Ground sees healthy gains

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

By The Associated Press
Wednesday, Dec. 18, 2013, 2:27 p.m.
 

The CEO of FedEx Corp. doesn't anticipate drones taking over the package delivery business anytime soon.

Fred Smith says FedEx has several drone studies under way. But the idea of delivering items by drone is “almost amusing,” Smith said in a conference call on Wednesday as the company reported financial results that included double-digit revenue gains by Moon-based FedEx Ground.

Smith said FedEx has a drone expert on staff: technology chief Rob Carter.

“He actually owns a drone,” Smith said. “He reported that it operates about eight minutes and can carry four Budweiser beers at his farm.”

Jeff Bezos, the CEO of Amazon.com, caused a stir recently when he said that Amazon is exploring drone deliveries and that sending a small package via an automated drone could become reality in a few years. United Parcel Service and German delivery company Deutsche Post DHL have said they are evaluating drone delivery.

There are huge obstacles to residential drone deliveries. The Federal Aviation Administration barred their use for commercial purposes in 2007. No-fly zones abound in places such as Washington. There are questions about who is liable if a drone crashes and damages something, or someone, on the ground.

Though FedEx eventually may have to cope with online retailers making local deliveries, it's dealing now with customers shifting from overnight delivery service to cheaper ground transportation. That shift was a factor in the smaller-than-expected gain in FedEx's second-quarter profit.

Revenue and domestic volume fell slightly in FedEx's express unit, which handles overnight shipments and is the company's largest division. Freight revenue was up 4 percent.

FedEx Ground, however, posted a 10 percent increase in revenue, or roughly $2.8 billion, compared with about $2.6 billion the year earlier. Operating income rose 3 percent to $424 million from $412 million.

The unit's results benefited from more shipping generated by e-commerce and from higher shipping rates, partially offset by lower fuel surcharges because of declining gasoline prices in recent weeks.

FedEx employs about 3,000 people in Western Pennsylvania, including 2,500 at FedEx Ground's headquarters in Moon.

For the quarter, FedEx said earnings increased 14 percent to $500 million from $438 million. Revenue rose 3 percent to $11.4 billion, from $11.1 billion.

Earnings of $1.57 a share fell short of the $1.65 expected by most analysts. The company earned $1.39 a share in the year-ago quarter, when the effects of Hurricane Sandy suppressed results by about 11 cents.

FedEx shares closed at $139.72, up 63 cents.

Staff writer Thomas Olson contributed to this report.

 

 
 


Show commenting policy

Most-Read Business Headlines

  1. Retailers that won’t open on Thanksgiving hope move pays off
  2. Lower gasoline prices fail to spur consumer spending
  3. Google applies tech to medical device
  4. Federal agency checking whether Highmark has enough doctors in Medicare plan
  5. Thanksgiving deals called the best
  6. Oil prices continue descent, dragging market indexes lower
  7. Housing prices nudge upward as more homes on market
  8. Household debt on the rise after 5-year decline
  9. Health care, gas drilling industries await Gov.-elect Wolf’s footprint
  10. Butler County firm Deep Well Services tackles tough gas wells
  11. Westinghouse to construct colossal nuke plant in Turkey
Subscribe today! Click here for our subscription offers.