FedEx earnings were upbeat but it all came on cost cutting, not rising demand. The broader market watches FedEx results because shipping habits and demand are a good barometer of economic health.
International airfreight was down 15.6% y/y in the quarter ending in May and the decline has been accelerating. Overall shipping was stable but customers are shifting to lower-cost, slower deliver and that suggests companies are still in cost-cutting mode rather than a more free-spending, investing mode that might boost the economy.
The company maintained its US and global growth forecasts, seeing 2% 2013 growth and 2.5% 2014 growth but warned of a ‘highly uncertain’ global outlook.
Shares in the premarket are up 1.3% to $100.72 and for the stock bugs amongst you here’s the full report
I was involved with a lot of shipping companies a few years ago and when the GFC hit the first thing to get targeted was the costs of shipping goods. A lot of the big boys like Fedex and UPS took a big hit in the UK as customers went looking for the cheapest delivery methods they could find, even at the cost customer satisfaction.
