FedEx shares slide as trade turbulence hits demand, profit forecast
June 25 (Reuters) - FedEx shares dropped nearly 6% in premarket trading on Wednesday after the logistics giant sounded caution for the full year ahead and forecast current-quarter earnings below market expectations, as it battles volatile global demand due to pressures from U.S. tariffs.
"The global demand environment remains volatile," said CEO Raj Subramaniam during an earnings webcast, as the company failed to provide full-year earnings and revenue forecasts, pointing to uncertainties surrounding U.S. trade policies —especially on those related to China.
The Trump administration imposed 145% tariffs on China in April, that intensified a global trade war, before reducing them to 30% in May. With FedEx having more exposure to China than rival UPS, the company's executives said they expect tariff policies to continue weighing on the U.S.-China air trade transit.
The biggest hit is from the Trump administration ending duty-free status for direct-to-consumer shipments — valued at less than $800 — from China-linked bargain sellers like Temu and Shein, FedEx Chief Customer Officer Brie Carere said.
"FedEx is like the economy's Fitbit. Express shows business demand, Ground tracks e-commerce, and Freight reflects industrial strength. Right now, all three are looking sluggish," said Michael Ashley Schulman, partner at Running Point Capital Advisors.
Shares of German logistics company DHL fell nearly 2%, while UPS was down 0.8%.
FedEx and UPS, both bellwethers for the U.S. economy and the logistics sector, have been battling for market share as industrial demand slows, while delivery profits have taken a hit as customers shifted to cheaper ground shipments from costly air services.
The company's outlook overshadowed a better-than-expected profit for the fiscal fourth quarter as it cost cuts and improved export volumes that pushed operating margins higher.
"U.S. manufacturing is still dealing with supply chain and recession worries, global trade isn't moving much, and while FedEx is managing costs well, demand just isn't picking up yet," Schulman added.
FedEx shares trade at 11.63 times their projected 12-month forward earnings, compared to UPS's 13.40. (Reporting by Rashika Singh in Bengaluru; Editing by Shailesh Kuber)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
an hour ago
- Mint
Trump's ‘One Big Beautiful Bill' clears first Senate hurdle: Republican race for votes, criticism, proposals
The Republican majority-held United States Senate voted on and pushed through US President Donald Trump's much touted tax-cuts and spending proposal, dubbed as the 'One Big Beautiful Bill' Act today (late Saturday local time), according to reports. The US Senate voted 51-49 to pass the first Senate hurdle, and Donald Trump took to social media to celebrate, calling it a 'great victory' and crediting Republican lawmakers Rick Scott, Mike Lee, Ron Johnson, and Cynthia Lummis for 'fantastic work'. In his 'victory' post on Truth Social, Donald Trump said he will work on growing the US economy, 'reduce wasteful spending, secure our border, fight for our military and veterans, ensure that our medicaid system helps those who truly need it, protect our second amendment, and more…' The 'rare' weekend session began with a debate on the 940-page sweeping bill, with opposition from Democrats and two Republicans. The legislation seeks to fund Donald Trump's campaign promises on border control, military spending, immigration, and tax-cuts. After hours of delay US Vice President JD Vance worked to pursuade Republican lawmakers on the fence and delivered the 'tie-breaking vote', according to reports by Reuters and AP, respectively. Democrats have demanded that the Bill be read out in Chamber, and will be followed by 20 hours of debate, followed by amendment sessions before the bill is complete. The full process is expected to end by June 30. A senior White House official told Reuters that Donald Trump was monitoring the vote from the Oval Office late into the night. According to an analysis by the nonpartisan Joint Tax Committee, the Senate version of the bill's tax provisions would reduce government revenue by $4.5 trillion over the next decade, increasing the $36.2-trillion US government debt. The White House said this month the legislation would reduce the annual deficit by $1.4 trillion. As per the AP report, an estimate from the nonpartisan Congressional Budget Office showed that the House-passed version of Trump's tax bill would cost around 10.9 million more people their healthcare, and at least 3 million food aid. Top income-earners would see about a $12,000 tax cut under the House bill, while the package would cost the poorest Americans $1,600, the CBO said. Meanwhile, Elon Musk has renewed his criticism of Donald Trump's tax plan in a scathing post on social media platform X. He called the bill 'utterly insane and destructive.' He wrote: 'The latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country!' Democrats will focus their firepower with amendments aimed at reversing Republican spending cuts to programs that provide government-backed healthcare to the elderly, poor and disabled, as well as food aid to low-income families. (With inputs from AP and Reuters)
Hans India
an hour ago
- Hans India
Germany asks Apple, Google to ban Chinese AI app DeepSeek over privacy concerns
Germany's data protection commissioner has formally requested Apple and Google to remove Chinese AI chatbot DeepSeek from their app stores, citing concerns over illegal transfer of user data to China. Meike Kamp, the country's commissioner for data protection, stated on Friday that DeepSeek failed to prove it safeguards German users' personal information at a level consistent with EU privacy standards. According to its own privacy policy, the company stores user queries and uploaded files on servers located in China. 'Chinese authorities have sweeping access rights to personal data held by Chinese companies,' said Kamp. She emphasized that DeepSeek had been given an opportunity in May to comply with EU data transfer regulations or voluntarily withdraw its app—neither of which it followed through on. In response, Google confirmed receipt of the notice and said it was reviewing the request. Apple has yet to comment. DeepSeek also did not respond to media inquiries. The move comes amid growing global scrutiny of DeepSeek, which made headlines in January by claiming to have developed a low-cost AI model competitive with ChatGPT. While the announcement stirred interest, regulators in the EU and U.S. have since raised red flags about its data handling. Earlier this year, Italy blocked DeepSeek from app stores due to insufficient transparency around personal data use. The Netherlands banned it on government devices, and Belgium advised officials to avoid the app pending further investigation. Spain's OCU consumer group has requested a national probe, while the UK government has called its use a personal choice but is monitoring potential security risks. Meanwhile, U.S. lawmakers are preparing legislation that would bar federal agencies from using Chinese-developed AI, with a recent Reuters report alleging DeepSeek's involvement in Chinese military and intelligence operations. Germany's demand marks another blow to the Chinese firm's global credibility as governments become increasingly wary of foreign AI platforms and their data governance practices.
NDTV
an hour ago
- NDTV
Trump's Sweeping Tax-Cut, Spending Bill Clears First US Senate Hurdle
The Republican-controlled US Senate advanced President Donald Trump's sweeping tax-cut and spending bill in a key procedural vote late on Saturday, raising the odds that lawmakers will be able to pass his "big, beautiful bill" in the coming days. The measure, Trump's top legislative goal, passed its first procedural hurdle in a 51 to 49 vote, with two Republican senators voting against it. The result came after several hours of negotiation as Republican leaders and Vice President JD Vance sought to persuade last-minute holdouts in a series of closed-door negotiations. The procedural vote, which would start debate on the 940-page megabill to fund Trump's top immigration, border, tax-cut and military priorities, began after hours of delay. It then remained open for more than three hours of standstill as three Republican senators - Thom Tillis, Ron Johnson and Rand Paul - joined Democrats to oppose the legislation. Three others - Senators Rick Scott, Mike Lee and Cynthia Lummis - negotiated with Republican leaders into the night in hopes of securing bigger spending cuts. In the end, Wisconsin Senator Johnson flipped his no vote to yes, leaving only Paul and Tillis opposed among Republicans. Trump was monitoring the vote from the Oval Office late into the night, a senior White House official said. The megabill would extend the 2017 tax cuts that were Trump's main legislative achievement during his first term as president, cut other taxes and boost spending on the military and border security. Nonpartisan analysts estimate that a version of Trump's tax-cut and spending bill would add trillions to the $36.2-trillion U.S. government debt. Democrats fiercely opposed the bill, saying its tax-cut elements would disproportionately benefit the wealthy at the expense of social programs that lower-income Americans rely upon. Chuck Schumer, the Senate's top Democrat, demanded that the bill be read aloud before debate could begin, saying the Senate Republicans were scrambling to pass a "radical bill". "If Senate Republicans won't tell the American people what's in this bill, then Democrats are going to force this chamber to read it from start to finish," the New York Democrat said.
