The News
FedEx is holding about $2.7 billion in IEEPA tariff refunds that belong to its customers, up from $749 million at the end of May. The money covers duties FedEx paid to Customs on shippers’ imports and billed back to them. FedEx says it will pay it back “as soon as practicable.”
FedEx had filed $4.6 billion in refund claims with US Customs and Border Protection by the end of September and received about $3.3 billion.
“We remain committed to distributing these refunds as quickly as possible,” Chief Customer Officer Brie Carere said.
The details
Refunds are reaching FedEx faster than FedEx is paying them out. The balance it owes customers rises only when more comes in than goes back to shippers, and it more than tripled in four months.
FedEx began receiving government refunds on May 11 for entries where it was the importer of record, or was named as the notify party by the importer.
It is working through more than 20 million entries with IEEPA duties across hundreds of thousands of accounts.
Some of the money stays with FedEx. Where it never collected a tariff from the customer and wrote it off as a bad debt, the refund reduces its bad debt expense. FedEx has not said how much of the $3.3 billion that covers.
Fourteen class actions seek IEEPA refunds from FedEx. Thirteen are consolidated in Tennessee federal court, and one is in the Court of International Trade.
FedEx’s refund portal shows whether it has received the refund on a given shipment from the Treasury, with the amount, the interest and the date it arrived. Customers who opt in to share shipment and refund data with FedEx’s vendors get paid first.
Customers who decline data sharing through the portal still get refunds “on a longer timeline based on available internal resources,” FedEx said.
Refunds include any interest the Treasury paid FedEx.
Phase 1 refunds, for unliquidated entries and those within 80 days of liquidation, still arrive on a rolling basis. Eligibility for Phase 3, which covers finally liquidated entries, remains under court review.
Price and fuel did most of the work in FedEx’s US business. Volume grew 2% to 14.4 million packages a day, while revenue per package rose 7% to $15.32.
Total revenue rose 12% to $22.9 billion in the quarter that ended in September. Fuel surcharges supplied 4 points of that growth, and FedEx’s fuel bill rose 64% to $1.27 billion.
Ground economy volume fell 4%. “That was intentional as we really lean into the premium,” Carere said.
FedEx expects $130 million in higher linehaul trucking costs in Q4. CFO Claude Russ tied the pressure to a tighter labor market for truck drivers after “recent regulatory changes.”
Air freight grew faster than parcels. International freight revenue rose 28% to $1.44 billion, and freight pounds rose 15%. FedEx is selling that capacity to customers that mostly ship parcels with it.
FedEx “won new airfreight business with an AI data center customer after a more than 40-year, largely parcel-centric relationship,” CEO Raj Subramaniam said.
B2B shipments make up 60% of FedEx’s revenue. Data centers were its fastest-growing vertical in the quarter, and an automotive team set up a year ago has onboarded 13 major automotive customers.
International domestic volume, parcels moving within other countries, fell 11% as FedEx shifts toward cross-border B2B.
What’s next
FedEx’s 5.9% average list rate increase takes effect Jan 4, 2027. It expects Q4 revenue to grow about 10%, with fuel surcharges adding 3 points to US revenue growth and 7 points to international.
