FedEx CEO says “The magnitude of the Fed rate cuts . . . signals the weakness of the current environment,” as priority shipments between businesses, a bell-weather of the economy, dropped
FedEx reported a steep quarterly profit drop and lowered its full-year revenue forecast on Thursday after its customers continued to trade down from speedy, pricey delivery to cheaper, slower options.
Shares in the Memphis-based delivery giant tumbled almost 11% to $267.74 in after-hours trading, dragging shares in rival United Parcel Service
down 2.5%.
The shift to less-profitable packages is squeezing profits at FedEx and UPS. While the latter pinned the blame on a flood of volume from China-linked e-commerce players that Reuters identified as Temu and Shein, FedEx pointed to a drop in priority shipments between businesses.
CEO Raj Subramaniam said industrial demand was softer than expected. Shipments between manufacturers and other companies in that segment are the most profitable for FedEx, which is often seen as a bellwether for the U.S. economy.
🇺🇸 US NFIB Business Optimism Index 91.2
In very depressed/#recession territory!
Chart: @tEconomics pic.twitter.com/5pYtfwhm0F
— Alex Joosten (@joosteninvestor) September 21, 2024
PHL Fed: manufacturing sector moves sideways in Sep as new orders decline, employment rises, breath of expectations widens as respondents have more divergent outlooks, and price increases reaccelerate, for both input and output prices – very mixed bag: pic.twitter.com/cZBtJj2a98
— E.J. Antoni, Ph.D. (@RealEJAntoni) September 21, 2024
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