FedEx FY 2Q15 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

West coast ports are affecting things

“While we are still in the heart of peak season, there are several trends and developments that are affecting the season, including labor issues at the West Coast ports that have affected productivity and impacted retailers’ ability to get inventory where it’s needed and when it is needed. This issue has impacted our operations as we’ve made adjustments to capacity in key markets to support our customers facing these ongoing port slowdowns.”

Lower fuel costs offset by lower fuel surcharge revenue

“While second quarter results benefitted slightly year-over-year from the net impact of fuel, due to lower fuel prices this year versus last, the year-over-year reduction in fuel surcharge revenue largely offset the benefit of the lower fuel prices.’

Peak is a little more spread out than in past years

“I would also say that – reference back to what Mike said, looks like peak is more spread out than in years past. So while we had a great November at Ground, it was a little bit lower than we had planned for and we put in all that peak planning cost and everything”

Lower oil price could stoke foreign trade

“We’ve positioned our global powerful network around the world with exactly the right infrastructure, we have the 777s of course that are now flying non-stop out of Asia Pacific and around the world. So we think that the decrease in oil is going to have an increase in customers demand for higher yielding products.'”

The ecommerce economy is changing patterns

“November volumes were softer than our expectations but you need to know that this is not at all unusual in this new ecommerce economy. Over the last several peak seasons we have regularly observed situations where volume hasn’t always come where we expected it or come when we expected it but one thing has been certain, it always comes.”

The west coast port thing has been much bigger deal than people realize

“Let me put a little color on an issue that I think has been underreported and I suspect you’re going to hear a lot more about in January when the retailers start putting their results out. The slowdown in the West Coast ports has been a much bigger deal than people think and a tremendous amount of inventory was simply not put through the ports in the timeframe that the retailers had expected”

Air transport is driven by value per pound of the good

“what drives the movement of goods by air more than any other thing is the value per pound and there may be some closing samples that go air express or move by air but the vast majority of apparel is never going to move by air simply because the price point of the goods won’t justify the much higher cost of moving by air. “