FedEx Freight forecasts stronger holiday-quarter earnings as freight pricing improves

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FedEx Freight holiday-quarter forecast

Highlights

FedEx Freight forecasts adjusted fourth-quarter profit of 65 to 75 cents per share, above analyst consensus of 53 cents, driven by improved shipment volumes and pricing.
Revenue for the seven months to December is expected between $5.58 billion and $5.65 billion, representing a 4% to 6% increase year-over-year.
U.S. Bank Freight Payment Index reports shipper spending rose 32.1% year-over-year in Q3, pushing sector rates higher amid diesel price spikes and driver shortages.

Quarterly results and holiday outlook

As reported by Reuters, FedEx Freight says improving shipment volumes and stronger pricing support its forecast for adjusted fourth-quarter profit of 65 cents to 75 cents a share, above analysts' expectation of 53 cents. The company also says revenue for the seven months to December is expected in the range of $5.58 billion to $5.65 billion, up 4% to 6% from a year earlier.

The largest U.S. less-than-truckload company reports adjusted profit of $1.49 per share for the quarter ended September 30, down from $2.10 per share a year earlier. The decline is tied largely to separation costs following its June spinoff from FedEx and to higher fuel prices.

Revenue rises 8% to $2.44 billion, helped by better yields and fuel surcharges. Analysts had expected adjusted profit of $1.36 per share and revenue of $2.37 billion, according to LSEG data, and the company's shares rise 2.1% in extended trading.

Freight market pressures lift rates

Broader market conditions are also pushing freight pricing higher across the sector. U.S. shippers in the third quarter pay the most to move freight since 2021, according to the U.S. Bank Freight Payment Index released on Thursday.

The index shows shipper spending surges 32.1% from the third quarter of last year amid widespread cost pressure. A jump in diesel prices linked to the Iran war and a reduction in available truck drivers following federal immigration crackdowns also send rates higher.

FedEx Freight has been focusing on cutting costs, adding more higher-priced freight and stabilizing volumes since its June 1 spinoff. The company has also switched to a calendar year from its previous June-May fiscal year following the separation.

In our earlier article on surging U.S. toy prices ahead of the holiday shopping season, we noted that tariffs and energy-linked increases in shipping and input costs were pushing shelf prices higher. The report also highlighted how manufacturers were facing margin pressure as elevated fuel, commodity, and logistics costs tied to Middle East tensions continued to filter through supply chains into consumer prices.

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