Gloomy Economic Conditions Cause a Decrease in the Volume of Global Shipping: FedEx
The deteriorating economic conditions have caused a decrease in the volume of global shipping, according to Multinational transportation US-based FedEx.
FedEx shares fell more than 24% Friday after the company issued a profit warning and canceled the previous income guidelines for this year, which connected moving to the deteriorating global economy.
“The results of the first quarter have been negatively impacted by the sweetness of the world volume that accelerates in the final weeks of the quarter,” the company said in its financial results statement on Thursday evening.
The company declared that its financial results had been affected by macroeconomic weakness in Asia and service challenges in Europe, leading to an income deficit in this segment of around $ 500 million parallel to the forecasts of the company.
Because of the deteriorating financial condition, the company decided to close more than 90 office locations and five corporate office facilities worldwide, postpone the recruitment of staff, cancel the planned network capacity and other projects, and also reduce the volume of labor working hours.
FedEx observed that operating income fell to $ 1.19 billion in the June-August period, down 15% from $ 1.4 billion YOY, according to the statement.
The company also revised the estimated capital expenditure for the 2023 fiscal year to $ 6.3 billion, from the previous estimate of $ 6.8 billion.
FedEx said in June that lower economic development and lower supply chain disorders caused lower shipping demand in the March-May period this year.
Although the operating results of the company have improved during this period by its income management actions, “the sweetness of world volume, pulled by COVID lockdowns, geopolitical uncertainty, and slower economic growth, partially compensates for the improvement from one year to the next, “it said in Thursday’s declaration.
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“The volume decreased from year to year due to efforts to limit the economic volume and slower customer demand,” President and CEO Rajesh Subramaniam said in a statement on June 23.
Gloomy Economic Conditions Cause a Decrease in the Volume of Global Shipping: FedEx
