FedEx Ground sees healthy gains
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
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Kennametal profits drop more than half in fiscal fourth quarter
- GNC sales, profits slip in second quarter
- Range Resources cuts workforce 11%
- Post-Gazette offers voluntary buyouts in bid to avoid layoffs
- Muni bond funds stressed
- U.S. Steel CEO expects rebound
- PPG puts brand 1st in strategy to reach commercial paint market
- Plastics propel Bayer’s 2Q earnings
- EPA ordered to ease limits on cross-border air pollution that involves Pennsylvania
- Voice-assisted technology raises privacy concerns
- United Airlines hack coincided with incursion into government employee data