Economic storm clouds are gathering worldwide as some of the largest shipping companies warn about sliding global trade. US shipper FedEx and Danish shipping giant A.P. Moller-Maersk A/S have been vocal about emerging signs of a global slowdown. Both of these companies are widely seen as a barometer for international trade.
The latest to warn about weakening economic growth is FedEx CFO Michael Lenz telling an audience Tuesday at the Robert W Baird Global Industrial Conference that the company has reduced flights and parked planes to cut costs in response to soft demand for package delivery.
Look, we absolutely will realize more of the structural cost savings in the second half of the year. That’s where you get more of the benefits start to roll in principally from — at Express, the flight reductions.
When you park the aircraft, particularly the older airplanes that we’re packing, you’re deferring a maintenance event, which is a significant expense. While at the same time, you have relatively low ownership costs on those.
So it’s an operationally and financially flexible way to manage capacity there. So as I said, we’re projecting a lower demand outlook for the foreseeable future here.
I don’t have a perfect crystal ball to say what the overall macro environment will be. Don’t have a full year earnings outlook for FY ’23. So I don’t have any specific projection to give you there, but rest assured, as some of these specifics that I was highlighting illustrate, we are fully committed to continuing to take the actions we need for changed expectations of what the operating environment is.”