FDX WANTS TO SPUR DOMESTIC BUSINESS
FDX Corp., the parent company of Federal Express and RPS, says it will
revamp its sales operations to spur domestic package growth.
Domestic volume growth continued to lag at FDX’s flagship FedEx unit in the
second quarter, raising questions that go to the core of the express company’s operations.
While domestic deliveries account for almost 90 percent of FedEx’s business, average daily
domestic package volume has edged up just 2.8 percent to 2.9 million packages this year.
FDX needs that domestic growth rate to be in the "six to eight
said Alan B. Graf Jr., executive vice president and chief financial officer.
Analysts suspect e-mail and faxes are eating away at FedEx’s overnight
document business, but Graf said its letter business is still growing. He blamed the slow
domestic growth on a yield management program that has FedEx turning away unprofitable
business and on a poor sales effort targeting the package business of smaller shippers.
To address the sales issue, FDX plans to reorganize its sales force and focus
on winning more business from small- to medium-sized shippers. The company, which has
struggled to present a cohesive FDX brand, plans to detail its sales and marketing
strategy in mid-January. Observers expect the company to integrate parts of FedEx’s and
RPS’s sales forces and to announce a new brand marketing strategy.
Graf said FDX also will cut costs for the remainder of the fiscal year
to offset fuel costs. The company will cut capital expenditures by $200
million and try to save $75 million by implementing a hiring freeze. Graf
said there would be no lay-offs.
The carrier has also engaged in some hedging to protect itself from
higher fuel prices in the second half of this fiscal year and in its next
fiscal year, beginning in June.