Operating income at FedEx Express falls by 69%

Old_Joe

Here are just a few excerpts from a current NPR report:

In a challenging economy, FedEx isn't delivering, and that has Wall Street worried.

Last quarter it processed fewer packages because of "weakening economic conditions," and operating income at FedEx Express fell by 69%, according to FedEx's latest earnings report, released on Thursday.

Expenses at its ground carrier were up, and now the company plans to raise its rates by about 7%, on average.

The company is going to take some of its aircraft out of service and scale back Sunday delivery. On top of that, it intends to close almost 100 retail locations and, like many companies right now, it plans to press pause on hiring until the economic uncertainty around the world clears up.

FedEx also says it faces "service challenges" in Europe, where a recession looks likely, and "macroeconomic weakness" in Asia, which continues to struggle from strict COVID lockdowns, as well.

While it provides a good read for two key parts of the economy, it also serves as reliable indicator of what may be coming down the road. FedEx's earnings contracted in a similar way during the last three recessions — in 2020, 2009, and 2001, according to analysts at Barclays.

Today, FedEx has a giant global footprint. It operates in more than 200 countries, and the Memphis-based company's half a million employees process more than 15 million shipments every day.

Derf

@Old_Joe : This is old news, I just used their service twice in the last two weeks ! Business is picking up .

Old_Joe

@Derf- Thanks, man! You may single-handedly save the entire economy. We won't forget this, I promise.

Crash

laugh. The P.O. is already re-instituting a seasonal rate hike prior to Christmas. starts in october, sometime. They did it last year, too and maybe the year before. screwing the public. why? because they can. Thanks to uncle-clown-Louis DeJoy, the Trumpster's appointee. Piece of shit.

Old_Joe

@Crash- Your comment suggesting that the Post Office is early in re-instituting holiday rates isn't warranted. Because of DeJoy's slowdown of deliveries, people need to start right about now if they want their Christmas packages to arrive in time.

Crash

Hello, OJ. This is not about delivery times, but about cost.
"...extra handling costs..."

How is my package deserving of a higher rate to get to its destination on one particular day as opposed to the day before? It's crap.
"...Pending favorable review by the PRC, the temporary rates would go into effect at 12 a.m. Central on Oct. 2, and remain in place until 12 a.m. Central Jan. 22, 2023."

"This seasonal adjustment will bring prices for the Postal Service’s commercial and retail customers in line with competitive practices..."
That's just Double-speak for: "other shippers are raising rates, so we will, too."

https://about.usps.com/newsroom/national-releases/2022/0810-usps-announces-proposed-temporary-rate-adjustments.htm
@Old_Joe

Old_Joe

@Crash- I was being sarcastic... since DeJoy has increased the delivery times it only makes sense to him that the costs should be increased also.

Crash

oops, i'm not awake yet. Thanks, OJ.

BenWP

I'm hoping for a dog food delivery next week via FedEx. Doing my part...

Old_Joe

Way to go, Ben! You and Derf are my new heroes.

BenWP

I chat with our regular UPS driver who told me during the worst of Covid how many new hires the company had authorized. I think it was between 100 and 200K. I asked him if their union had a two-tier wage system similar to the UAW, but he assured me these were full-time positions, and all would be union members. I hope these drivers are still working. FedEx drivers are not organized, so I expect their employment prospects may be very dim about now. FWIIW, when I have a choice, I direct my business to unionized employees. Chewy uses FedEx, exclusively.

Sven

While it provides a good read for two key parts of the economy, it also serves as reliable indicator of what may be coming down the road. FedEx's earnings contracted in a similar way during the last three recessions — in 2020, 2009, and 2001, according to analysts at Barclays.

That could be a serious problem. Higher fuel cost must contributed to increased operation cost. Shipping demand should be falling when people are returning to office.