The operating results for the Federal Express segment showed improvement during the quarter, driven by cost reduction measures from the DRIVE initiative, higher base yield, and increased export volumes both domestically and internationally. However, these gains were partially offset by rising wages, increased transportation costs, and the expiration of the U.S. Postal Service contract.

In contrast, the FedEx Freight segment experienced a downturn in operating results due to lower fuel surcharges, a decrease in weight per shipment, and fewer overall shipments, although this was somewhat mitigated by higher base yield.

Raj Subramaniam, President and Chief Executive Officer of FedEx, stated: “The FedEx team delivered improved profitability while navigating a very challenging operating environment, which included a compressed peak season and severe weather events. I am proud of the team for executing our transformation efforts while strengthening our value proposition and enhancing the customer experience. Looking ahead, we remain committed to supporting our customers amid the changing macroeconomic landscape.”

During the quarter, FedEx completed its $2.5 billion share repurchase plan, executing $0.5 billion in buybacks through open market transactions. Approximately 1.8 million shares were repurchased, contributing to a $0.12 increase in earnings per diluted share due to the reduced number of outstanding shares. As of February 28, 2025, there was $2.6 billion remaining under the company’s stock repurchase authorization, with cash reserves at $5.1 billion.

Outlook

FedEx has revised its fiscal 2025 revenue forecast, now expecting revenue to be flat to slightly down year-over-year, a shift from the previous expectation of approximately flat revenue. Capital spending is anticipated to be $4.9 billion, down from the prior forecast of $5.2 billion, with a focus on investments in network optimization and efficiency improvements, including fleet modernization and automation.

John Dietrich, Executive Vice President and Chief Financial Officer, commented: “Our team is making significant strides in reducing our cost to serve and enhancing our operational performance, particularly at Federal Express, which supports operating income and earnings growth. Our revised earnings outlook reflects ongoing weakness and uncertainty in the U.S. industrial economy, which is limiting demand for our business-to-business services. Despite this uncertainty, I am confident that we are well-positioned to execute our transformation initiatives and create value for our shareholders.”

This expansion also represents a strategic step in Walmart’s ongoing rivalry with Amazon. WFS aims to provide an alternative to Amazon’s Fulfillment by Amazon (FBA), enabling third-party sellers to leverage Walmart’s warehousing and shipping capabilities. As more sellers transition their inventory to Walmart’s platform, Amazon may experience a decline in freight volume within its logistics network. A key advantage for Walmart is its extensive network of physical stores, which function as mini-fulfillment centers, enabling quicker last-mile deliveries and lower transportation costs compared to Amazon’s dependence on regional fulfillment centers and its Amazon Freight network.

Amazon’s FBA model has faced scrutiny for high storage fees and long-term penalties, while Walmart has positioned WFS as a more cost-effective alternative with a straightforward pricing structure. Additionally, with Walmart GoLocal providing last-mile delivery services for third parties, integrating this with its freight brokerage could create a comprehensive logistics solution that rivals Amazon’s same-day and next-day delivery offerings.

Despite Walmart’s swift growth in the logistics sector, Amazon still holds a significant advantage with its dedicated air fleet, ocean shipping capabilities, and extensive network of third-party carriers. However, if Walmart strategically scales WFS, it could emerge as a formidable competitor to both Amazon and the broader North American 3PL industry.