On Tuesday, FedEx announced that it would raise its shipping rates by 4.9 percent, effective on January 5, 2015. Pricing has become a delicate balance for shipping companies recently, as the U.S. Postal Service lowered prices on Priority Mail shipping to compete for e-commerce revenue with companies like UPS and FedEx.
FedEx is also experiencing some setbacks in the international market. Technological goods, such as the iPhone, used to be shipped by air fairly close to their release date. Now, however, tech companies are beginning production earlier and using cheaper and slower transportation methods, like sea carriers, as an alternative to air travel.
The Wall Street Journal reported yesterday, "With the company's express network stabilized, executives said they are now focusing on improving international revenue in the face of a global trade environment that is proving more challenging than originally expected."
FedEx has also set aside a legal fund after the Ninth Circuit Court of Appeals ruling that some of FedEx's workers in California and Oregon were employees as opposed to independent contractors, meaning that they are entitled to certain company benefits they did not initially receive. FedEx is in the midst of appealing the ruling, but executives do not appear concerned, saying that the case has not affected earnings.
On Wednesday, FedEx reported that its first-quarter profit rose by 24 percent, increasing revenue in freight, express and ground segments. The company credits the restructuring of its air-express division, which included trimming employment costs and buying more fuel-efficient planes for the air fleet.
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