FedEx Has More to Worry About Than Tariffs and a Freight Slump
The company’s efforts to combine its Express and Ground networks carry much more risk than the $4 billion of cost cuts that its CEO delivered.
A combined network is expected to reap $2 billion of additional savings and efficiencies.
Photographer: David Paul Morris/Bloomberg
FedEx Corp. reported on Tuesday that it was able to increase margins in its fiscal fourth quarter on flat revenue thanks to cost cuts even amid a lingering freight recession, a tariff war and new rules that dried up so-called de minimis shipments from China.
The stock still got dinged in after-hours trading because the company’s first-quarter earnings-per-share forecast fell short of analysts’ estimates. The company punted on providing a forecast for the coming year, and that makes sense given all the uncertainty around tariffs, trade and the economy.
Of course, that’s all short-term noise compared with the huge task that lies ahead to complete the transformation plan that Raj Subramaniam announced soon after taking over as chief executive officer in June 2022. The company will ramp efforts over the next two years to combine its two distinct delivery networks — Express and Ground — which carries much more risk than $4 billion of cost cuts that Subramaniam promised and delivered.