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FedEx executives see little industrial growth coming soon

Sept. 24, 2024
After a disappointing Q1 earnings report, the company’s leaders have trimmed their guidance for FedEx’s fiscal year.

The leaders of the largest for-hire trucking fleet in the United States think it will be well into 2025 before the manufacturing sector provides a lift to transportation companies.

FedEx Corp. President and CEO Raj Subramaniam and Chief Customer Officer Brie Carere told analysts earlier this month that they expect the industrial economy to improve only slightly between now and next spring. Even then, they added, it won’t generate a significant tailwind for trucking fleets. The parcel and less-than-truckload carrier ranks No. 1 on the FleetOwner 500: For-Hire list.

“We’re cautiously optimistic that industrial production will moderately improve in the second half” of FedEx’s fiscal year (which ends May 31), Subramaniam said Sept. 19. “But we are dialing in pretty low growth expectations at this point because of the environment we are seeing.”

See also: FedEx reviewing future of $9B LTL group

Subramaniam and his team were speaking after Memphis-based FedEx reported quarterly net earnings of about $790 million, which was down from nearly $1.1 billion in the same quarter of last year and below expectations. Executives also lowered their profit forecast for FedEx’s fiscal year, which drove down the company’s shares (Ticker: FDX) by 15% on Sept. 20 and weighed heavily on the stock of other publicly traded carriers.

Results in the company’s FedEx Freight LTL segment also were down from a year earlier, with revenue slipping 2% to about $2.3 billion and operating income falling 9% to $439 million. Both weight per shipment and average daily shipments fell 3% but revenue per shipment rose 2%.

The company’s business deteriorated during the quarter compared to the summer of 2023 when the abrupt closure of Yellow Corp. upended many carriers’ traditional patterns: Shipments were down 7% in August after being down 2% year over year in July and up slightly in June.

About the Author

Geert De Lombaerde | Senior Editor

A native of Belgium, Geert De Lombaerde has more than two decades of experience in business journalism. Since 2021, he has written about markets and economic trends for Endeavor Business Media publications FleetOwner, Healthcare Innovation, IndustryWeek, Oil & Gas Journal, and T&D World. 

With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati. He later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector and many of its publicly traded companies.

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