Andrew Kelly | Reuters FedEx on Thursday announced rate hikes and outlined its cost-cutting efforts after the shipping giant warned last week that its first-quarter results were hurt by weakening global demand. Shares of FedEx were up about 2% on Thursday afternoon. Last week, the company’s stock sank after it posted preliminary revenue and earnings that fell short of Wall Street expectations. CEO Raj Subramaniam cited a tough macroeconomic environment and said he expected the economy to enter a “global recession.” The company withdrew its guidance for the year and said it would cut costs. The shipping giant struggled with light volumes in the quarter, citing headwinds in its European and Asian markets. The poor results rattled the market as investors tried to distinguish the market’s woes from FedEx’s own internal shortcomings. In releasing its full first-quarter results on Thursday, the company said express, ground and home delivery rates would increase an average of 6.9%. FedEx Freight rates will increase an average of 6.9%-7.9%, the company said. He also said he believes he will save between $1.5 billion and $1.7 billion by parking planes and reducing flights. Closing some locations, suspending some Sunday operations and other cost actions will save FedEx Ground between $350 million and $500 million, according to the company. FedEx said it will save an additional $350 million to $500 million by reducing the use of suppliers, postponing projects and closing office locations. “We are moving with speed and agility to navigate a challenging operating environment, pulling cost, trade and capacity levers to adjust to the effects of reduced demand,” said Raj Subramaniam, president and CEO of FedEx Corp. For its 2023 fiscal year, the company expects total cost savings of $2.2 billion to $2.27 billion. Despite its grim warning last week, FedEx stood by its 2025 forecast presented in June. The company forecasts annual revenue growth between 4% and 6% and earnings per share growth between 14% and 19%.
