FedEx's Very Bad, Terrible, No Good Day
On Thursday, September 15, FedEx released its preliminary earnings report for the quarter that ended on August 31, and the numbers were worse than expected. In response, the value of the carrier’s stock shares dropped by more than 21% the next day— the largest single-day decline in the company’s history. In this blog post, we’ll tell you what the fall means for customers, how FedEx plans to get back on track, and what actions you can take if FedEx’s new cost-cutting measures negatively impact your business.
What caused the drop?
In a company-wide report, FedEx’s president and CEO, Raj Subramaniam, explained the poor performance: “Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the US.” When the first report for the Fiscal Year 2023 was released, the carrier withdrew its full-year guidance. The company lost $11 billion in market value in just a day, returning to its July 2020 value. For comparison’s sake, the former steepest drop was 16.4% on Black Monday in 1987.
Later, in an interview with CNBC, Subramaniam — who took over as president and CEO in June 2022— said, “We are a reflection of everybody else’s business, especially the high-value economy in the world.” In short, this is not a FedEx problem. It’s a global one.
How will FedEx get back on track?
If the issue is a worldwide decline in shipping, is it possible for FedEx to perform well in upcoming years? According to Subramaniam, the answer is yes. He says the carrier is “aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives.”
These efforts include the closure of 90 FedEx office locations and five corporate facilities, a hiring freeze, reduced labor hours and linehaul expenses, a reduction in flight frequencies, the parking of some aircraft, the cancellation of network capacity projects, and a decrease in Sunday hours at some locations. With these measures in place, the CEO and president says he’s “confident in achieving our fiscal year 2025 financial targets.”
How can you protect your bottom line while FedEx employs cost-saving measures?
FedEx has a plan to get back on top. But what will the reduced labor hours, hiring freeze, and fewer flights mean for the shipments you entrust to the carrier? If the cost-saving measures result in missed delivery deadlines, ShipRx can help you get a refund with parcel audits.
ShipRx’s proprietary parcel audit software automatically scans more than 40 factors to help you secure refunds when FedEx doesn’t uphold its service guarantee. Getting started is free, and it’s easy to cancel anytime.
A dip in FedEx’s stock shouldn’t impact your right to fast, on-time delivery. It’s our mission to level the playing field between the carriers and shippers by identifying inefficiencies through data analysis. Most of our clients see refunds of 2-3%— get in touch with us today to start receiving the refunds you deserve.
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