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Speaker 1: Well, we were talking a moment ago about the news

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Speaker 1: from FedEx after the bell, the company withdrawing its annual

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Speaker 1: earnings forecast and saying at the same time preliminary results

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Speaker 1: for the current quarter fell short of estimates. Let's get

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Speaker 1: to Bloomberg's lead Class Cowie is a transportation and logistics

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Speaker 1: analyst for Bloomberg Intelligence. Lee, thanks for being with us,

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Speaker 1: just judging when you look at the stock in late trading,

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Speaker 1: scent of the downside. This must have been a huge

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Speaker 1: shock here. What's up coming under the hood here? What's

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Speaker 1: going on? Yeah, I mean, sentiment for shares of FedEx

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Speaker 1: is and pretty low for quite some time, and this

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Speaker 1: is just another kick in the teeth I guess the shareholders. Uh.

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Speaker 1: The end of the day is that, you know, like

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Speaker 1: a slowing economic activity in uh around the world is

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Speaker 1: really impacting its ground and express business. Um, you know,

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Speaker 1: we were hoping to see some green shoots of positivity

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Speaker 1: from it's a T and T acquisition that it made

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Speaker 1: a number of years ago. But you know, because that

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Speaker 1: that that that organization was finally fully integrated into FedEx Express.

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Speaker 1: But that's gonna take some time. It seems like it's

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Speaker 1: just less demand and higher costs really weighing not only

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Speaker 1: on revenues but earning. Um. You know, it's worth noting that,

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Speaker 1: you know, consensus um the numbers for their ground business

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Speaker 1: was more or less in line with consensus expectations, but

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Speaker 1: Express was about five lower on the top line. Uh.

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Speaker 1: And just the color about you know, the uncertainty that

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Speaker 1: is driving management to pull their full year guidance is

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Speaker 1: also probably spooking investors as well. Yeah, so no guidance,

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Speaker 1: But what's the plan? Do we get any detail on

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Speaker 1: this house pittis going to get out of this hole?

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Speaker 1: And what do we know about potential cost cutting? Yeah?

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Speaker 1: I mean they list the whole uh, a whole bunch

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Speaker 1: of actions that they're going to do, including you know,

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Speaker 1: parking some aircraft, reducing the number of flights that they have, um,

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Speaker 1: you know, closing some of their FedEx office locations. I

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Speaker 1: think they said about ninety differ some of the hiring

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Speaker 1: that they were planning on doing. Uh, and also kind

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Speaker 1: of delay some of the CAPEX programs that it was

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Speaker 1: planning on doing as well. Um, you know, and this

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Speaker 1: is supposed to you know, mitigate some of the um

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Speaker 1: not only the higher costs that they're that they're facing,

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Speaker 1: but also I guess better aligned the resources for their

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Speaker 1: network to match more closely to the demand that they're seeing. Um.

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Speaker 1: You know, obviously the you know, the closures in in

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Speaker 1: China to to COVID have had a lot of impact

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Speaker 1: in terms of economic activity that are coming and going

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Speaker 1: in and out of that country. Uh. And then obviously

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Speaker 1: the inflationary pressures that you're facing, especially as it relates

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Speaker 1: to energy prices because of you know, the ongoing war

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Speaker 1: in Ukraine is also creating some weakness. You know, we

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Speaker 1: we would also you know, I guess a little positive

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Speaker 1: is that the US consumer tends to be a little

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Speaker 1: stronger than those outside of the US, So that might

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Speaker 1: you know, be a welcome signed for it's a ground business,

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Speaker 1: and it's less than truckload business, which is FedEx straight um,

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Speaker 1: you know, that continues to do very well. They are

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Speaker 1: facing probably lower volumes and the details yet, but the

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Speaker 1: pricing environment for less than truckload remains pretty strong at

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Speaker 1: mid single digits at least that's what we're seeing for

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Speaker 1: other carriers. So we use this company kind of as

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Speaker 1: a proxy for the global economy. Lead very quickly twenty

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Speaker 1: seconds or So, is there one region of the globe

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Speaker 1: that that is really a very weak right now and

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Speaker 1: that would cast the FedEx performance in doubt going forward.

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Speaker 1: I mean, I think it's more or less what's going

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Speaker 1: on in Europe followed followed, followed probably by China, and

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Speaker 1: then in the the United States. I think Europe is

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Speaker 1: the weakest lead. Good stuff. Thank you so much for

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Speaker 1: making time to chat with us, League class Cow there.

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Speaker 1: He is transportation and logistics analysts for Bloomberg Intelligence, joining

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Speaker 1: us here on daybreak. Ocasion