FedEx on Thursday announced between $2.2 billion and $2.7 billion in cost savings for the fiscal year ahead and said it would raise shipping rates for air and ground services in January.
FedEx Corp. on Thursday announced between $2.2 billion and $2.7 billion in cost savings for the fiscal year ahead and said it would raise shipping rates for air and ground services in January, after what it said was a slowdown in volume and “weakening economic conditions.”
“There’s a time lag between the actions we can take on reducing the line-haul network,” he said. “That’s all it is.” Management said $1.5 billion to $1.7 billion in savings would be drawn from that unit, as they shrink flight frequencies and park jets. Operating income for the Express business plunged 69% from the year-earlier period, on an 11% drop over that time in global package and freight volumes.FedEx said $350 million to $500 million in savings would come from its Ground unit, whose trucks haul packages to businesses and residences in the U.S. and Canada.
With costs rising, FedEx also said it would raise shipping rates by an average of 6.9% in its Express, Ground and Home Delivery services. Those increases take effect on Jan. 2. FedEx reported sales of $23.2 billion, compared with $22 billion in the year-ago period. But that also missed expectations for $23.6 billion.
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