FedEx Corp. (NYSE: FDX) does not believe it can successfully raise its rates much for the holidays, or it would. Instead, it has pushed a rate increase into 2018, when it will not have as much risk as it would during the heaviest shopping period of the year.
The company announced it would increase its Express and Ground Rates by 4.9% on January 1. FedEx freight rates will go up the same amount on the same date. One Rate prices will move up by an average of 3.5% on that date as well.
The rate increases should help FedEx continue what has been good revenue and earnings momentum. Revenue last year was $60 billion, up from $50 billion a year earlier. The purchase of TNT Express and the revenue it brought accounted for much of the increase. However, FedEx also reported strength on its bottom line. Net income hit $3 billion, up from $1.8 billion on the same basis in the prior year.
FedEx results have had a positive effect on its share price, which at $215 trades just below its 52-week high. Its 52-week low is $162. The stock has more than doubled since mid-2013.
The FedEx rate increase is above the rate of inflation, which is generally a sign of price leverage. UPS and the U.S. Postal Service are the only direct competitors FedEx has. The USPS gets weaker every year. FedEx does not have a monopoly in its sector, but a duopoly with UPS will do.