Shipping and logistics company Federal Express (FDX) has announced that it is cutting costs
and increasing the fees it charges as it seeks to achieve $2.7 billion U.S. in savings.
Specifically, FedEx said that it plans to eliminate flights, cancel infrastructure projects, and close
offices as demand for its services wanes coming out of the pandemic, and amid a tight global
labour market.
The Memphis, Tennessee company is also raising its shipping rates to boost its revenue going
forward.
The measures come a week after FedEx withdrew its annual guidance and issued preliminary
financial results that were short of Wall Street expectations.
The announcement of the cost cutting measures were made along with FedEx’s latest quarterly
print. The company reported earnings of $3.44 U.S. a share, matching the preliminary figure it
issued last week. Revenue in the quarter ended August 31 totalled $23.2 billion U.S.
Going forward, FedEx said it will reduce flight frequencies and park many of its cargo jets. The
company will also close package sorting facilities and corporate offices.
FedEx also plans to raise delivery rates across its express, ground and home delivery
operations by an average of 6.9% starting in January 2023.
FedEx stock endured its worst one-day decline in more than 40 years last week after the
company pulled its guidance, citing weakness in Europe and Asia.
Year-to-date, FedEx’s stock is down 40% at $154.54 U.S. per share.
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