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LTL market only getting tighter: FedEx Freight | Journal of Commerce
The largest US trucking company is more profitable than ever despite the capacity and service challenges posed by waves of e-commerce-generated freight and a resurgent industrial economy.
FedEx Express will get 20 new cargo planes, while FedEx Ground will get 16 new automated package facilities, FedEx executives said. What’s really needed to improve network fluidity, however, are workers. “The labor market over the last several months has been quite challenging, adversely affecting hiring and leading to the reengineering of parts of our network,” Smith said.
“When you don’t have the people, your throughput is lower, and you're not getting the density in trailers you expect,” Mike Lenz, executive vice president and CFO, said. He was speaking of FedEx Ground, but his observation would hold true for the FedEx Freight LTL operation as well.
The company is banking on an expected improvement in the labor market this fall, as continuing COVID-19 vaccinations and economic recovery create more opportunities to bring people back into the workforce. But in a year like 2021 there are no guarantees. “Volume increases will require additional flexibility on the part of our management, our staff, and front-line team members,” Smith said.
One thing the company said it will not consider is the sale of the LTL business. Rival UPS sold its LTL arm, UPS Freight, in January to TFI International, Canada’s largest trucking operator, for $800 million. But UPS Freight was barely profitable, with one of the worst operating ratios in the LTL sector. FedEx Freight now has one of the best. “Our commitment to our freight business is absolute,” Lenz said.
