FedEx Looks To Fill Gap Created By Grounded Planes

Logistics and shipping company FedEx said it can pick up the slack caused by the grounding of several airliners due to the coronavirus outbreak, according to a report by the Associated Press.

FedEx Chairman and CEO Fred Smith said the company can handle the new demand for its services all around the world, and executives in the company seem optimistic since China seems to be in the preliminary stages of recovery from the virus.

“For the last couple weeks, we have seen increased demand from Asia,” said FedEx President Raj Subramaniam. “We have seen strong demand for FedEx Ground here in the U.S. and especially home delivery, and even the commercial volumes have been quite stable.”

The company recently posted stronger than expected revenue, but its profit also dropped steeply. FedEx has stopped its forecasts for the fiscal year due to the outbreak. The company said it received $315 million in Q4, which is down by about 57 percent year over year.

That period included both the holiday season and the start of the pandemic. Revenue reached $17.5 billion, which is an increase from $17 billion and over the predicted $16.9 billion.

In the most recent quarter, the company had to deal with a weaker global economy, higher costs from moving to seven days a week and the departure of Amazon. FedEx said it was executing cost-cutting measures like retiring older planes, handling its capacity thresholds and tweaking residential delivery routes.

“We continue to deliver for our customers and are ready to support increased demand for our International Express export services due to the significant reductions in intercontinental air capacity,” Smith said.

FedEx shares were up 4.9 percent, reaching $94.96 a share. The results caused a slight surge. Overall this year, the company’s shares have dropped 37 percent, and the Standard & Poor’s 500 index is down 22 percent.