The FedEx delivery specialist is ready to raise prices
FedEx Corp. (FDX) reported the results of the first quarter of the fiscal year 2022 on Tuesday, September 28, after which FDX quotes lost about 10%.
Higher costs resulted in lower operating margins. Shortly, the company intends to fight this by hanging delivery rates. The global economy continues to recover, but problems with supply chains and inflation remain urgent.
In addition, companies such as FedEx also face the problem of labor shortages. All these factors continue to affect the delivery business negatively. At the same time, the company itself called the lack of staff one of the main problems.
The shortage of personnel provoked an increase in wages and bonuses. According to FedEx, the impact of labor shortages on quarterly results was approximately $450 million last quarter. Overall, higher labor and supply chain costs contributed to a 10.3% year-on-year increase in capital expenditures. Additional expenses also impacted FedEx’s net income, resulting in a 16% year-on-year decrease in diluted earnings per share.
To compensate for higher costs and improve profits, FedEx intends to increase tariffs from January 2022. Customers will be most likely to accept new prices, as the demand for delivery is very high, and competing logistics companies also intend to increase the cost of services.
Thus, FedEx has yet to overcome some global challenges that negatively affect its business. At the same time, the company is a beneficiary of the growing demand for delivery services of various formats — from small parcels to sea containers. At the auction on September 30, the FDX stock was worth $219.29.
