Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Exclusive-FedEx Ground to lower holiday volume forecasts -internal memo

Stock Markets Oct 07, 2022 02:36PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. A FedEx last-mile delivery van is seen near a FedEx Ground distribution center in Carson, California, U.S., September 16, 2022. REUTERS/Bing Guan
 
FDX
+2.66%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Lisa Baertlein

LOS ANGELES (Reuters) -The FedEx Corp (NYSE:FDX) division that handles most of the company's e-commerce deliveries expects to lower volume forecasts to reflect its customers' plans to ship fewer holiday packages, according to an internal memo obtained by Reuters.

The confidential message sent to the 6,000 independent contractors that handle delivery and trucking for FedEx Ground in the United States follows the global shipping giant's Sept. 15 withdrawal of its full-year forecast due to an unexpected first-quarter profit drop of more than 20%.

FedEx shares fell more than 3.2% to $150.21 after Reuters reported the news on Friday.

"We expect there to be downward adjustments to volume forecasts," Paul Melander, a FedEx Ground senior vice president, said in the message to the unit's delivery contractors earlier this week. The new forecasts will be released on or about Oct. 21, he said.

"These changes will reflect the latest information from customers about how they anticipate current conditions are likely to decrease their volumes this holiday season," said Melander, who added that FedEx will further revise volume forecasts as warranted leading up to the start of the Christmas package delivery season.

FedEx in a statement declined to elaborate on its message. The company said it is working with customers to ensure it is prepared for the peak holiday delivery season.

FedEx Ground is the company's second-largest and fastest-growing division. It delivers online orders for Walmart (NYSE:WMT), Chewy (NYSE:CHWY) and other retailers.

Over the last two weeks, more than a dozen Ground delivery providers told Reuters that their volumes are down anywhere from 5% to 15% so far this year versus the same time in 2021. Many said the company's holiday forecast was overly optimistic for the second year in a row.

FedEx's Ground contractors have been pushing back against company policies and contract changes that have eroded their margins. At the same time, the U.S. last-mile delivery industry is starting to grapple with profit-sapping excess capacity.

FedEx leadership blamed the company's recent financial setbacks on economic conditions that rapidly deteriorated in late August. Investors and analysts were skeptical, pinning much of the blame on the company's slow response to softening demand.

The pandemic's online shopping boom has been unwinding in the months since U.S. consumers shed protective masks and shifted spending back to brick-and-mortar stores, travel and entertainment. Record inflation has further dampened demand for goods ranging from sofas to sneakers as higher costs for housing, food and fuel drain disposable income.

Walmart, one of FedEx's largest customers, in late July warned that its shoppers were cutting back purchases of nice-to-have goods as prices for necessities surged.

FedEx's more profitable rival United Parcel Service (NYSE:UPS) declined comment for this story, citing the quiet period ahead of its earnings report on Oct. 25. UPS leadership stood by company forecasts in analyst meetings in late September.

Exclusive-FedEx Ground to lower holiday volume forecasts -internal memo
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email