FedEx Beefs Up Annual Capex to Strengthen Ground Network

Researched by Industrial Info Resources (Sugar Land, Texas)--FedEx Corporation (NYSE:FDX) (Memphis, Tennessee) plans annual capital expenditures of more than $5 billion during the next two years as it beefs up its ground services network. The big (and getting bigger) global courier service also has increased its planned capital expenditures for the current fiscal year due to increased investment in FedEx's Ground Segment, according to company executives. Industrial Info is tracking active FedEx projects ranging in value from $1 million to $335 million.

Click on the image at right to see a graph detailing FedEx projects by market region.

Speaking at the company's quarterly earnings conference call, FedEx Chief Financial Officer Alan Graf said capital expenditures for the company's current fiscal year, now in its fourth quarter, are expected to be $4.8 billion. The company earlier targeted the capital spend at $4.6 billion. For more information, see October 27, 2015, article - FedEx Estimates $4.6 Billion in Capital Spending for 2016.

FedEx Ground Chief Executive Officer Henry Maier said capital projects this year include two hubs and 19 automated satellite facilities. The projects will bring the total number of automated facilities to 103 out of a network of about 550, he said.

Industrial Info is tracking FedEx's mega-hub distribution center project in Allentown, Pennsylvania. Phase 1 of the project, valued at $335 million, is scheduled to kick off in May. The two-phase project comprises a 1.2-million-square-foot distribution center and supplemental buildings, as well as state-of-the-art material handling technology and supporting equipment. Completion of phase one is set for November 2017.

Construction also is expected to start this year on the $220 million distribution center in Middletown, Connecticut. The planned, 500,000-square-foot distribution center is expected to handle 45,000 packages per hour.

The forecast annual capital expenditure of $5 billion over the next two years doesn't take into account FedEx's plans to acquire European parcel firm TNT Express NV (Hoofddorp, Netherlands), said Graf. "The actual number will be higher because we're going to have to invest in TNT," he said, explaining the Dutch firm had been "under invested." The European Union has approved FedEx's bid for TNT, which is valued at $4.8 billion.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.