Shipper Warns of Reduced Revenue Growth

Shipper Warns

As people around the world continue to look for ways to stretch resources as far as possible, one shipping company is finding the shift hard to swallow.

FedEx recently announced its third quarter financial results, and there were a couple of unexpected surprises. One of the most noticeable revelations is the decline in net income.

Net income for the third quarter was down by 31 percent from the same period in the previous year. CEO Frederick Smith cites the continued shift of customer demand toward less expensive ground shipping as the key reason for the sharp decline.

The decline has been so pronounced in Asia, for example, that the company is looking to trim costs in the region. One of those cost cutting opportunities includes the possibility of retiring its older, less efficient aircraft to help compensate for the decline in air freight.

FedEx Chief Financial Officer Alan Graf states that the international revenue decline reduced third quarter earnings by $100 million. Graf expects the international air freight portion of the business to continue its decline for the foreseeable future.

Do you think the USPS ground-based shipping in the US offers a competitive advantage over its rivals as they struggle to cope with reduced air freight demand?

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