FedEx is worldwide so I don’t think it’s all US economic impact. Plus there are people getting out more vs shipping to homes, supply chain is better so less express freight needed, retailers and suppliers are over in inventory and people were catching up post Covid last year…. However…. It is likely also an indicator of the ripple effects of all that plus slowing demand from concerns on the economy and inflation. Buckle up? Or will the economy grind forward through it ok? FedEx closes offices, parks aircraft after poor quarterly earnings report MEMPHIS, Tenn. (WMC) - After FedEx Corp. provided its preliminary first quarter financial results on Thursday, the company announced that it is initiating several cost-cutting initiatives to offset a declined volume of packages which dropped its quarterly revenue below expectations. FedEx provided its quarterly results on Thursday which showed that results for 2023′s first quarter ending Aug. 31 were adversely impacted by global volume softness that accelerated in the final weeks of the quarter. This led to a revenue shortfall of approximately $500 million for FedEx Express, and a shortfall of approximately $300 million for FedEx Ground relative to the company’s forecasts. FedEx President and CEO Raj Subramaniam announced on Thursday that the company is taking action to reduce costs to offset the falling demand.
Will be interesting to see how bad the quarterly report is for UPS. That would either confirm what FEDEX is saying, or implicate FEDEX for gross mismanagement of their expected growth rate.
Amazon has created out of whole cloth it’s own delivery system. I suspect losing a lot of the Amazon business is going to hurt ups and fedex. I imagine fedex missed this change.
I don't think this can be overstated. We do a lot of our shopping online, and probably 80% of what lands on our doorstep is now via prime delivery vans. Used to be mostly UPS. What Amazon has done with prime logistics in the last few years is really impressive. I'm curious what FedEx looks like now compared to pre pandemic. Capacity as well as volume of packages. This could suggest slowing consumer demand... Or mismanaged / excessive capacity growth.
His warning is the primary reason the market is in the tank today. Part of that is the market looking for bad news right now, but it seems an over reaction to me. Not that the economy is in great shape and a recession is probably likely, but one company with a whole host of potential underlying reasons seems to be given too much sway short term. Jmo.
i just don’t know enough but I suspect that fedex has lost its way. Amazon Prime delivery is working Walmart plus is delivering. I have a friend who is home today because he is getting some top end speakers delivered by fedex today. He just is sitting at home waiting because fedex has said delivery is sometime today.
FedEx, UPS, USPS, PRIME, Walmart delivery, etc. Lots of competition these days. This may be a reset/reorganization. Business models that don’t change end up like Sears.
FedEx isn’t indicative of the entire economy. Maybe 15-20 years ago but as others have pointed out there are a ton of other shipping options now. They are also poorly managed. This is also what is supposed to happen when you have to raise rates to combat inflation. The economy slows. If it didn’t we would really be F’d.
Wait…how can this be happening? Just this week Biden hosted his inflation reduction party (despite the fact inflation numbers have not reduced) and the vibe was the economy was on the way back. Damn, I fell for it again.
I don’t think that they missed that change. I believe that they did grossly overestimate the long term demand for their non Amazon business. It’s a shame when executive management (who should know better) listen to internet and media blabber about how brick and mortar is dead and buried and all commerce will go online and delivery. The last few times Mrs Aging took me shopping with her the stores were pretty busy and people were walking around with bags. I realize that’s no guarantee as the bags could all have $5 worth of merchandise in them, but empty stores would be a guarantee.
Off topic a bit, but I drove thru Memphis awhile back on the way to the airport and man Fedex was everywhere south of town; planes, trucks, corporate park, Fedex Forum downtown, etc. If they are struggling/cost cutting, it's bad news for Memphis and the surrounding areas.
I think it is a combination of a lot of things. Amazon's own delivery system, wal-mart's delivery system, and people going back into the real world inside of staying at home.
The economy is definitely slowing down. Home purchases are way down due to high interest rates. Consumer purchases are way down due to 8+% inflation. Europe, one of our main trading partners, is already in recession due to high energy costs. One chemical my company makes is a leading indicator of the economy, and sales have been trending downwards for a few months now. It will be a while before it gets bad enough for companies to consider layoffs, but that could happen in the second half of next year. It is going to be difficult for Biden to be re-elected if he doesn't turn the economy around quickly.
Amazon cut FedEx out in 2019 as part of their expansion into logistics and it's no secret that AWS has been funding Amazon for a while. However, looks like their currently choking on their overambitious distribution center plans. We have two in Brevard County sitting finished and empty. Opinion | The Case for Splitting Amazon in Two
