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FedEx predicts a prolonged surge in e-commerce shipments

FedEx expects demand for its e-commerce delivery services to remain strong for the "foreseeable future," after a pandemic-induced surge in online ordering boosted parcel volumes by double digits.

FedEx and its competitor UPS benefited from consumers shopping from home more often during the coronavirus pandemic, leading to an influx of parcels with household goods, holiday gifts and other items. But the e-commerce frenzy has also driven up costs, prompting logistics groups to impose surcharges and raise prices.

FedEx reported that average daily parcel volume in its ground segment rose 25 percent year over year in the three months through the end of February. The express segment also handled more parcels, with average daily volume up 12 percent.

Fred Smith, FedEx CEO, said the company expects "demand for our unmatched e-commerce and international express delivery solutions will remain very strong for the foreseeable future."

"The significant improvement in third-quarter results underscores the momentum of our business, which continued through an unprecedented peak season," added Michael Lenz, chief financial officer.

Overall, FedEx's third-quarter results were better than analysts had expected, thanks to strong growth in U.S. domestic delivery volumes and international priority services, as well as overcoming winter weather in February, which reduced operating income by $350 million.

Winter storms disrupted several major facilities, including FedEx's main express delivery center in Memphis and others in Indianapolis and North Texas, the company said.

Revenue for the period rose 23 percent to $21.5 billion. Analysts had expected a smaller increase to $20 billion.

Net income jumped to $892 million from $315 million in the same quarter last year. The company earned $3.47 per share on an adjusted basis, up from $1.41 last year and beating analysts' forecast of $3.23.

FedEx shares rose more than 3 percent in over-the-counter trading.