Earnings Results: FedEx plans up to $2.7 billion in cost cuts, higher shipping rates as demand weakens

by | Sep 22, 2022 | Stock Market

FedEx Corp. on Thursday announced between $2.2 billion and $2.7 billion in cost savings for the fiscal year ahead and said it would raise shipping rates for air and ground services in January, after what it said was a slowdown in volume and “weakening economic conditions.” Executives, during FedEx’s
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earnings conference call later in the day, said the higher rates were a response to inflation. The package delivery giant’s CEO, when questioned by analysts, expressed confidence in the executive team currently in place, and said the company was prepared for the peak holiday-period shipping season even as it scales back and hikes prices.

However, he said he hadn’t anticipated the “tremendous inflation of costs” that hit last year. And executives said they expected demand levels seen in late August — when they said spot rates for ocean and air transportation in parts of Asia took a sharp turn south — to continue for the rest of the year. CEO Raj Subramaniam said the company ran a complex operation, making it difficult to respond to conditions in the air and on the ground more quickly as demand wilted. “There’s a time lag between the actions we can take on reducing the line-haul network,” he said. “That’s all it is.” “From a customer perspective, our customers are incredibly sticky,” Brie Carere, FedEx’s chief customer officer, said during the call. “What we experienced, especially in August, both in Asia and here in the United States, is two things: Their demand actua …

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