According to a Wall Street Journal article, FedEx Corp is beginning to feel the pinch of a slowing global economy. It’s Interesting that this announcement comes at the height of the heaviest shipping season of the year. Apparently FedEx feels this is not just a blip on their financial radar screen, but something much larger and impactful.
In an effort to stave-off as much of the negative financial impact of this slowdown, FedEx is offering buyouts to employees in their FedEx Express unit. Some of the reasons for this concern are issues we have been hearing on a daily basis recently; including Brexit, and the many unknown’s surrounding “what’s next.” Tariff and Trade disputes, again something we hear each and every day, yet no one really knows where these talks are going to end up, who wins and who loses, at least at this point in time.
Another factor affecting FedEx financially is the “not so great” results from its integration of TNT Express, a $4.8 Billion purchase, as well as a 2017 Cyber Attack. Apparently, the volume of business and profits TNT Express was supposed to add to the FedEx coffer’s apparently just hasn’t materialized.
So what can we take from this news? The transportation industry has always been and will continue to be a bell weather of what the economy is actually going to do in the near term. So we expect this slowdown to affect all transportation sectors including, Air, Rail, Trucking and Ocean. We firmly believe that beginning in 2019, shippers may just find the pendulum swinging in their favor. How far that pendulum swings in terms of freight rate flexibility remains to be seen however. And, all of this coming on the heels of the major carriers announcing and implementing their Annual General Rate Increases.
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