FedEx Blames Economy, Pricey Fuel as Profits Dip
STEVE INSKEEP, host:
Another airline company of sorts, FedEx, says it expects to deliver lower profits. The overnight shipping company is seen as a bellwether for the broader economy. It it's doing more business, businesses are ordering more parts and consumers are ordering more stuff. In its latest financial report, FedEx says it made more money than expected in the recent quarter, but it warns of slow growth in the year ahead.
NPR's Scott Horsley reports.
SCOTT HORSLEY: FedEx is getting squeezed by two big forces beyond its control. The economic slowdown means fewer people are sending overnight packages in the U.S., and each package costs more to deliver because of soaring oil prices.
FedEx's profits in the most recent quarter were down more than 6 percent from a year ago. CEO Fred Smith says he doesn't expect a big improvement overnight.
Mr. FRED SMITH (CEO, FedEx): Now, the wildcard going forward remains the price of fuel. We are in uncharted territory when oil consistently sells for more than $100 a barrel.
HORSLEY: FedEx has been investing in more fuel efficient airplanes and delivery trucks and may speed that up now. Smith is also one of a group of corporate executives who've been promoting government policies to make the U.S. less dependent on imported oil.
Mr. SMITH: Based on my rough calculations, this is probably the largest transfer of wealth in the history of the world - $2.5 trillion from the oil importing countries to the oil producing countries since the price of fuel began to run up in 2002.
HORSLEY: FedEx adds a surcharge of about 18 percent on overnight shipments to cover the higher fuel cost. That's prompting some customers to opt for cheaper ground transportation, where the fuel surcharge is only about 6 percent.
Scott Horsley, NPR News.
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