FedEx's wheels firmly on the ground in trucking Andrew Ward on how the delivery group's strategy to expand into the lighter truckload segment is paying off
FedEx is building an increasingly powerful presence in the US road freight market, expanding its delivery capabilities beyond parcels into a broader range of cargo.
Revenues from FedEx Freight, its trucking division, rose 20 per cent in the 2006 fiscal year, which ended in May, and accounted for more than 11 per cent of the group’s Dollars 32bn total.
Investors are hoping to see the positive trend continue today when FedEx reports first-quarter results.
This month, the group completed the Dollars 780m acquisition of Watkins Motor Lines, a large US truck company, further strengthening its presence in the sector. With more than Dollars 1bn of annual revenues, Watkins will increase the scale of FedEx Freight by about a third.
The deal came a year after UPS, FedEx’s biggest competitor, entered the road freight market through the Dollars 1.3bn acquisition of Overnite Corporation.
Both FedEx and UPS are focused on the Less-than-Truckload (LTL) segment, which handles lighter loads than the heavy truckload carriers.
FedEx wanted Watkins because it specialises in long haul, nationwide deliveries that differ from the group’s existing short haul, regional services.
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