FedEx announced it will combine its FedEx Freight and FedEx National LTL operations effective Jan. 30, 2011.

This action will increase efficiencies and reduce operational costs, according to the company. It also will give customers a choice of priority or economy less-than-truckload freight services across all lengths of haul from one integrated company.

The move will mean cutting 1,700 full-time employees and closing approximately 100 facilities. (FedEx has operated two separate less-than-truckload networks since it acquired Watkins Motor Lines, now FedEx National LTL, in 2006.)

This change, along with the company's ongoing yield management initiatives, is expected to substantially improve the profitability of the FedEx Freight segment in fiscal 2012.

For the first quarter, the FedEx Freight segment reported an operating loss of $16 million on revenue of $1.26 billion. Last year, revenue was less ($982 million), yet the company had an operating income of $2 million.

Operating losses in the quarter were driven by lower yields and higher volume-related costs, as significantly higher shipment levels required increased purchased transportation and other expenses.

LTL average daily shipments increased 29 percent and yield declined 3 percent year over year primarily due to the effects of discounted pricing in contracts signed in fiscal 2010. However, yields increased 4 percent from the fourth quarter as a result of the company's recent yield management initiatives to improve pricing.