FedEx Is A Fragile Package

Discussion in 'The Latest FedEx Headlines' started by cheryl, Oct 11, 2009.

  1. cheryl

    cheryl I started this. Staff Member

    FedEx Is A Fragile Package - Forbes

    Global shipper and logistics outfit FedEx is flying high now, but expect the stock to lose some altitude in coming weeks.

    FedEx ( FDX - news - people ) posted strong first-quarter profits of $0.58 per share, thanks to cost controls and better-than-expected International Priority shipping. Nonetheless, compared to last year, profit was down 53% to $181 million, and revenues sank 20% to $8.01 billion.

    On the expense side, it appears FedEx still hasn't got a handle on managing energy costs. When oil prices soared to record highs last year, FedEx had no hedge cover. Last quarter, lower fuel surcharges hurt income. FedEx is hoping a 5.9% average rate increase, effective January 2010, for express domestic and export shipping will recover revenue from lower fuel surcharges, but the likelihood that FedEx will be able to effectively pass on any rate increase to consumers is weak. Public package delivery companies are already facing stiff competition from the United States Postal Service's move to offer flat rate prices based on package size instead of weight.