Skip to content
Thomas Black

FedEx’s Pricing Power Isn’t Working and Won’t Last

Revenue per package is near the peak, yet that isn’t translating into higher operating profit, and demand is deteriorating.

Price doesn’t equal profit.

Price doesn’t equal profit.

Photographer: Joe Raedle/Getty Images

After carving a fifth off the market value of FedEx Corp. last week when it withdrew its annual forecast and announced preliminary results that fell well short of expectations, investors were in a more forgiving mood on Thursday for the full quarterly report. They mildly welcomed FedEx’s effort to chop as much as $2.7 billion of costs over the next 12 months to offset sagging package volume, especially at the Express unit. The shares rose 0.8% on a day when the S&P 500 Index fell 0.8%.

No doubt, the cuts are needed. Package volume at the Express unit fell about 11% in the fiscal first quarter from a year earlier because of disruptions in China from severe Covid lockdowns and in Europe because of Russia’s war in Ukraine. Operating profit at Express fell to a paltry $174 million from $567 million a year earlier.