Global logistics services giant, US-based FedEx, has reported net income of $384 million for its fiscal first quarter ended 31 August, which is down 22 per cent from the same period last year. The dip, the service provider said, has occurred  in the face of "challenging" economic conditions.

The delivery giant also said it would raise shipping rates 6.9 per cent from 5 January next year for domestic US and US-export services in an effort to compensate for "weaker global macroeconomic conditions."

Chairman, president and CEO Frederick Smith also said the delivery giant will "continue to hold the line on costs across all segments."

While Q1 revenue was up 8 per cent, to $9.97 billion, expenses rose 11 per cent, to $9.34 billion. Operating income was $630 million, down 23% from $814 million for the same period last year.

Not surprisingly, fuel costs were up 66%, to $1.6 billion.

The FedEx airline unit reported operating income of $345 million, down 34% from $519 million in the prior-year period. The dip was in spite of a 9% rise in revenue, at $6.42 billion.

A company statement said results "were impacted by global economic weakness, higher fuel prices and the related negative effects of higher fuel surcharges. . .These factors more than offset the benefits of aggressive cost containment activities..."

Cost reduction measures included a reduction in flight hours.

FedEx has also announced that it is upgrading its "international priority" service from Europe to major US East Coast cities from two-day to overnight at current rates. Now, packages for Washington, New York, Philadelphia, the Newark area, Boston and Baltimore will arrive by 3 pm the next day as part of standard "international priority" service.

The service provider also said that it would offer next-day service for heavyweight freight shipments to the US East Coast from Brussels, Basel, Copenhagen, Madrid, Paris, Lille, Mulhouse, Eindhoven, Stockholm, Malmo and Gothenburg.

The service upgrade will be supported by a four-times-a week westbound transatlantic MD-11F service from Paris Charles de Gaulle to Newark.