- The company will stop using several planes to transport parcels and plans to close up to 100 points of sale
The weakening of the US economy as a result of the inflation that has shaken the world for months has had collateral damage to the productivity of FedEx Corporation.
And it is that, during the last quarter, a logistics company of American origin registered fewer shipments and deliveries of packages, which translated into a 69% decrease in its operating income.
Inflation Crisis & the March Towards Recession
Fears of an all-out economic crisis deepen as FedEx says it expects a global recession based on world shipping activity, & a higher-than expected inflation report. @BrianBeckerDC & @profwolff discuss
LISTEN: https://t.co/3JIIT9IqXw pic.twitter.com/Mxl6zVvhHe
— The Socialist Program with Brian Becker (@TheSocProgram) September 21, 2022
According to the most recent report on its balance sheets, the company’s expenses in its land operations increased considerably due to the increase in fuel prices and for this reason it is proposed that in the coming days its rates for the US market will suffer an average increase of 7%.
However, some operational changes are also ahead for FedEx, as it transpired that shortly several of the planes that the multinational used to move documentation, articles and merchandise inside and outside the American Union will stop operating, this as a readjustment measure.
Likewise, package delivery services will be reduced on Sundays and the option of closing about 100 points of sale in the United States is contemplated.
Although at the moment the possibility of any reduction in personnel is not in sight, it is a fact that any type of hiring of employees is ruled out, at least until the global economic uncertainty has been overcome.
The unexpected announcements caused a depreciation in the shares of FedEx, which lost up to 20% of their value and this also dragged their competitors UPS and XPO Logistics in the financial market.
This crisis that FedEx is facing could intensify even more, since its operations in Europe are not flowing as expected either, and in the face of a greater increase in the price of energy and fuel, its operations could be even more affected towards the end of the year.
It is noteworthy that, although FedEx operates in more than 200 countries and with half a million employees, who are in charge of processing more than 15 million shipments daily, some experts find a great similarity between the loss of profits suffered by the multinational in 2001, 2009 and 2020, with subsequent recessions in the US economy.
The truth is that the logistics company has been in the midst of a very complicated transition since four months ago when it decided to replace Fred Smith, who founded the company in 1971, with Raj Subramaniam, who currently serves as CEO.