FedEx Lowers Earnings Estimate, Raises LTL Pricing

Although the carrier is reporting a fairly healthy second quarter, the delivery giant has lowered its earnings forecast for the next two quarters.

In announcing its projections, FedEx pointed to weaker macroeconomic conditions it expects to offset benefits from lower fuel prices and the departure of DHL from the US domestic package market. In explaining current financial results, Alan B. Graf, Jr., executive vice president and CFO, says, "Second quarter results benefited from rapidly declining fuel prices and continued cost management. However, demand for our services weakened sequentially throughout the quarter and global economic trends continue to worsen, substantially reducing our second half outlook. We are adjusting our expense plans to more closely align with the weaker business conditions, and are now targeting capital spending of $2.5 billion for fiscal 2009, down from $3.0 billion at the start of the year."

The FedEx Freight and FedEx National LTL segments of the company’s business put a 5.7% general rate increase into effect on January 5, 2009. Rates for other FedEx operating companies, notably FedEx Express and FedEx Ground, are not affected by these increases.

The Freight and National LTL increases apply to both interstate and intrastate shipments as well as certain traffic between the US and Mexico and the US and Canada. There will be some additional adjustments that will apply to minimum and accessorial charges as well as some changes in selected service areas and lanes.

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