Global logistics giant FedEx (FDX, Financial) has revised its annual earnings and revenue forecasts downward due to the tariff policies imposed by the Trump administration on trade partners. This move has sparked significant concerns about the U.S. economic outlook. The company's third-quarter financial report shows revenue of $22.2 billion, a 2.3% increase from $21.7 billion the previous year, surpassing analyst expectations of $21.91 billion. Net income rose to $910 million from $880 million, marking a 3.4% increase. Adjusted earnings per share (EPS) were $3.76, up from $3.51 the previous year.
FedEx had previously adjusted its fiscal 2025 EPS forecast from $20-22 to $19-20 and has now further narrowed it to $18-18.60. Revenue expectations have also been adjusted from "flat" to "flat or slightly declining," reflecting the delayed impact of tariff policies on cross-border trade. The company anticipates full-year capital expenditures of $4.9 billion, while analysts expected it to remain at $5.2 billion.
The financial caution stems from a challenging reality. The U.S. industrial economy remains sluggish, with stagnant growth in transportation demand between companies. FedEx's CFO, John Dietrich, stated that the revised earnings forecast directly reflects the demand constraints caused by a weak industrial economy. In the third quarter ending February 28, adjusted EPS was $4.51, a 16.8% increase year-over-year but slightly below analysts' expectations of $4.54.
Of particular concern is the deterioration in the profit structure. The rising share of e-commerce delivery business has squeezed the high-margin B2B transport business, prompting major logistics companies to initiate cost-cutting plans. FedEx plans to permanently reduce expenses by $2.2 billion by fiscal 2025 and accelerate the freight division's spin-off plan announced last year, a strategic adjustment valued at $20 billion by analysts, aimed at optimizing express and ground operations.
The industry landscape is undergoing significant changes. After FedEx terminated its air transport partnership with the U.S. Postal Service in September, UPS quickly took over but announced in January a reduction in its delivery collaboration with its largest customer, Amazon. Under the shadow of a price war, every strategic adjustment by logistics giants affects global market nerves.
CEO Subramaniam attributes operational challenges to the combined effects of "peak season pressures and extreme weather," but the deeper issue lies in the deteriorating global economic outlook. The risks of a trade war triggered by tariffs are being transmitted through the supply chain to logistics, while the growth in low-end delivery demand driven by e-commerce prosperity cannot offset the decline in high-end B2B business.
FedEx's strategic shift mirrors the global economic barometer. As the White House wields its tariff policy, the numbers in FedEx's financial report tell a more genuine economic story than political declarations. In after-hours trading, FedEx's stock price plunged 5.5% to $232.69, while competitor UPS saw a decline of less than 1%, highlighting the differentiated impact of tariff policies on the logistics industry.
