FedEx Corp. reported increases in both its revenue and operating income during its fiscal Q3 2025, which ended Feb. 28.
On a quarterly earnings call with investors, CEO Raj Subramaniam said the carrier’s DRIVE program — which aims to improve the company’s long-term profitability — continues to build sequentially. FedEx achieved $600 million in savings during its Q3, he said.
“We delivered strong year-over-year results with adjusted operating income up 17% despite significant headwinds from the expiration of the United States Postal Service contract and severe weather events,” Subramaniam said.
The contract Subramaniam referred to expired Sept. 29, 2024. Through it, the U.S. Postal Service had tapped FedEx for air cargo for more than 20 years. As of Sept. 30, 2024, USPS contracts with the United Parcel Service (UPS).
Nearly three-quarters of FedEx revenue in its fiscal 2025 to date has come from U.S. domestic services, he said. Another 10% comes from “non-U.S. intra-country or intra-regional services,” Subramaniam added. “And from a bilateral U.S. trade perspective, our biggest single-country exposure represents only about 2.5% of total revenue.”
FedEx holiday delivery performance
Subramaniam credited FedEx team members for delivering “a strong peak within a compressed timeline,” referring to the condensed holiday shopping period between Thanksgiving and Christmas.
In 2024, the Cyber 5 — the five-day period from Thanksgiving through Cyber Monday — bled into December, shortening the busiest window in which consumers hunt for the best promotions. Subramaniam also credited FedEx team members for managing severe weather events including wildfires and severe winter storms.
On Cyber Monday, FedEx picked up nearly 24 million packages in the U.S., chief customer officer Brie Carere told investors.
That’s nearly 70% more than it picks up in the U.S. on an average day, she said. Because the time between Thanksgiving and Christmas was shorter in 2024, she added, FedEx handled more packages per day year over year during peak season.
“While demand during peak exceeded our expectations, post-peak trends were largely consistent with the market weakness of recent quarters,” Carere said.
FedEx revenue in Q3 fiscal 2025
In its fiscal Q3, FedEx grew revenue 2% year over year, to $22.2 billion from $21.7 billion.
FedEx operating income grew as well, to $1.29 billion from $1.24 billion. Meanwhile, net income grew to $0.91 billion from $0.88 billion.
“Weakness in the industrial economy continued to pressure our higher-margin B2B volumes,” Subramaniam said. “Similar to last quarter, this dynamic was most pronounced at freight, where fewer shipments and lower weights continue to negatively affect our results, albeit to a lesser extent than last quarter.”
Subramaniam added that the current market “is adding uncertainty to demand.” That uncertainty comes, in part, from U.S.-imposed tariffs both on products and on imports from a constantly changing list of countries.
Close to half of the Top 2000 retailers in North America use FedEx as a shipping carrier, according to Digital Commerce 360 data. The Top 2000 refers to North America’s largest online retailers by annual ecommerce sales. In 2024, 939 online retailers in the Top 2000 Database used FedEx as a shipping carrier.
“Overall volume trends improved in the quarter to our highest year-over-year average daily volume growth since Q4 of fiscal year ’21, led by 5% growth in Federal Express package volume,” Carere said. “Our volume growth was driven by deferred services and the timing benefit of Cyber Week.”
Ground volumes increased 7%, supported both by B2B and B2C growth, she added. Meanwhile, FedEx International export package volumes increased 8% in Q3.
How tariffs affect FedEx order volume
When it comes to tariffs, “most customers have not made any major changes to date because it’s really quite difficult to be able to set up additional inventory in another country or move manufacturing,” Carere said. “These are things that happen over months and years, not over weeks.”
And FedEx will benefit as retail and other corporate customers diversify their supply chains, Subramaniam said.
“We connect 220 countries and territories one to the other,” he said. “And as the supply-chain patterns change, the good news is scale is going to help us because we are already in all these markets.”
FedEx data on cross-border trade positions it “to create more value for our customers as they navigate change,” Subramaniam said.
“This includes providing a streamlined clearance experience for customers while helping them comply with regulatory requirements,” he said. “And through our automated processes, we can clear packages more quickly, better address improperly filed paperwork, and reduce manual work to respond rapidly to our customers’ needs while improving our operating efficiency.”
Impact of de minimis changes on FedEx volumes
Carere said that from a de minimis perspective, FedEx is “very ready from an operational capability perspective.”
As of 2016, de minimis rules for small-value ecommerce orders allow a single person to import items with a total value of up to $800 without formal customs declarations. Those rules could change with increased U.S. Customs enforcement, curbing how major players, including Shein and Temu, do their business.
“We have insight around the world into clearance data,” Carere said. “And so we’re working very closely with our customers to be able to prepare themselves for any change, whether it’s de minimis or change in market due to tariff.”
“The majority of our export volumes are linked to B2B volumes, and a minority of our revenue base on export lanes are covered under the de minimis exemption,” added chief financial officer John Dietrich.
Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s article on FedEx revenue.
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