FedEx Parks Planes, Maersk Cancels Sails: World Trade Appears To Be Rapidly Deteriorating
- FedEx Parks Planes, Maersk Cancels Sails: World Trade Appears To Be Rapidly Deteriorating
by Tyler Durden, https://www.zerohedge.com/
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.
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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.
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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.
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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.
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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.
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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.”
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