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A Look at FedEx Corp. (NYSE:FDX) Ground Division

FedEx Corporation (NYSE:FDX) Ground division revenues increased +12% due to volume growth and increased yields. Average daily volume at FedEx Ground increased 13% in the second quarter due to continued growth in residential and commercial services. FedEx Ground yield increased 5% during the second quarter and first half of 2018 primarily driven by higher base rates in commercial services and higher fuel surcharges.

FedEx Ground seen revenues increase 12% in the second quarter due to volume growth and increased yields, as seen below. 

FedEx Corporation (NYSE:FDX) ground services include day-certain delivery to businesses in the U.S. and Canada. 

FedEx operates under the FedEx brand. Their worldwide network has five regions outside the U.S.: Canada; Asia Pacific (APAC); Europe; Middle East, Indian Subcontinent and Africa (MEISA); and Latin America, Caribbean (LAC).

The FedEx Ground fuel surcharge is based on a rounded average of the national U.S. on-highway average price for a gallon of diesel fuel. Effective February 6, 2017, FedEx Ground fuel surcharges are adjusted on a weekly basis compared to the previous monthly adjustment. 

FedEx Ground Segment Operating Income

FedEx Ground division operating income increased 12% in the second quarter and 7% in the first half of 2018. Higher purchased transportation, network expansion and staffing costs along with increased self-insurance reserves partially offset these benefits and also drove the operating margin decline in the first half of 2018. 

Purchased transportation expense increased 13%, primarily due to higher volumes and increased rates. 

Of Note: Independent Contractor Model

FedEx Ground is involved in lawsuits and administrative proceedings claiming that owner-operators, engaged under a contractor model no longer in use, should have been treated as employees of FedEx Ground, rather than independent contractors. In addition, FedEx is defending joint-employer cases where it is alleged that FedEx Ground should be treated as an employer of the drivers employed by owner-operators engaged by FedEx Ground. These cases are in varying stages of litigation.