Federal Express 1998 Annual Report Download - page 31

FDX CORPORATION P29
The following table shows a comparison of selected shipment statistics for the years ended May 31:
In thousands, except dollar amounts Percent Change
1998 1997 1996 1998/1997 1997/1996
FedEx:
U.S. domestic express:
Average daily packages 2,767 2,490 2,246 +11 +11
Revenue per package $13.27 $12.77 $12.67 + 4 + 1
IP:
Average daily packages 259 226 192 +15 +18
Revenue per package $41.45 $40.91 $40.58 + 1 + 1
IXF/ATA:
Average daily pounds 2,770 2,542 2,144 + 9 +19
Revenue per pound $ .85 $ .94 $ 1.01 –10 – 7
Caliber:
RPS:
Average daily packages 1,326 1,067 1,043 +24 + 2
Revenue per package $ 5.04 $ 4.96 $ 4.92 + 2 + 1
Viking:
Shipments per day 13.3 33.3 31.3 –60 + 6
Revenue per hundredweight $ 9.28 $ 9.04 $ 8.07 + 3 +12
rapid growth of its deferred services, including FedEx
Express Saver. This growth was augmented by incre-
mental UPS strike-related volume, the majority of which
was in the deferred service category. Excluding the
effects of a temporary 2% fuel surcharge and the expi-
ration of the air cargo transportation tax on 1997
yields, FedEx U.S. domestic yields rose 5% in 1998 as
a result of continuing yield-management actions. These
actions included pursuing price increases on low-yielding
accounts, discontinuing unprofitable accounts, increas-
ing average weight per package and implementing a 3%
to 4% price increase targeted to list price and standard
discount matrix customers for U.S. domestic shipments
effective February 15, 1998.
The expiration of the air cargo transportation excise tax
added approximately $50 million to U.S. domestic rev-
enues and 1% to U.S. domestic yields in both 1997 and
1996. The tax expired on December 31, 1995, was
reenacted by Congress effective August 27, 1996, and
expired again on December 31, 1996. FedEx was not
obligated to pay the tax during the periods in which it
was expired. The excise tax was reenacted by Congress
effective March 7, 1997, and, in August 1997, it was
extended for 10 years through September 30, 2007.
FedEx’s IP service continued to experience double-digit
growth in average daily volumes and revenues, with
yields remaining relatively constant. Current year volume
growth slowed to 15% year-over-year, primarily due to
weakness in Asian markets.
In 1998 and 1997, FedEx’s international non-express air-
freight revenues were a significant factor in determining
international profitability. FedEx uses ATA airfreight ser-
vice (a lower-priced, space-available service) to fill space
on international flights not used by express services such
as IP or IXF. In 1998, weakness in Asian economies and
continued downward pressure on yields resulted in lower
non-express airfreight prices and revenues than in
1997. In 1997, airfreight revenues increased year-over-
year, due to FedEx’s expansion in international markets,
despite excess market capacity and downward pressure
on yields.
The increases in FedEx’s other revenue in 1998 and
1997 were primarily attributable to increased sales of
engine noise reduction kits.
RPS’s revenue per day increased 26% and 3% in 1998
and 1997, respectively, primarily due to increased aver-
age daily volume of 24% and 2% in these same years.
Over the same periods, RPS’s yield remained stable,
and effective February 9, 1998, management imple-
mented a 3.7% rate increase at RPS.
On a daily basis, Viking’s revenue declined 61% year-
over-year in 1998 and increased 15% in 1997. As a
result of Viking’s restructuring in March 1997, in which
operations at four of five divisions were terminated by
June 1997, Viking’s daily shipments declined 60% year-
over-year in 1998.