‘Ho-Ho…No’: Low Volumes Make for Less Than Happy Holidays at FedEx

Ah, the Holidays: carolers and lights, cookies and egg-nog, and … stubbornly low parcel volumes. On Dec. 19, FedEx received the present nobody wants: a 9% drop in share price, due almost entirely to the unfavorable volume conditions facing carriers across the parcel sector. In this weekly update, we’re looking at FedEx’s latest setback.

But we’re not just talking about FedEx’s lump of coal. We’re also digging into the Fed’s recent interest rate decision, a fast-changing supply chain situation at the U.S.-Mexico border, and much more. Here are seven headlines you need to know in the industry that's always moving.

Following Earnings Forecast, FedEx Shares Plummet

Following a Dec. 19 earnings forecast in which company leaders revealed they’re expecting a hit to revenues for the fiscal year, FedEx shares plummeted 9% in after-hours trading. Industry analysts had expected a revenue drop at FedEx of no more than 1%. The stark difference between the analyst projections and the company’s report left many shareholders anxious, leading to a sudden plummet in share price.

“In the remainder of [fiscal] 2024, we expect revenue will continue to be pressured by volatile macroeconomic conditions, negatively affecting customer demand for our services across our transportation companies,” a FedEx representative said in a recent filing, according to CNBC.

Maritime Carriers Pause Red Sea Travel as Red Sea Tensions Increase

Following a series of attacks on shipping vessels by Houthi rebels, major ocean carriers and shippers have paused shipping operations in the Red Sea. Carried out by Houthi rebels, the attacks were made as a show of support for Hamas militants fighting in the Gaza Strip.

The list includes MSC, the world’s largest ocean carrier, as well as Maersk, Hapag-Lloyd, Ocean Network Express, and CMA CGM. Oil and gas giant BP has also decided to halt shipping operations in the oil-rich region. Carriers and shippers alike are choosing to divert traffic around the Horn of Africa, resulting in significant delays and, concurrently, an increase in freight rates throughout the global maritime landscape.

Feds Hold Interest Rate Steady as Economic Outlook Improves

The U.S. Federal Reserve has held interest rates steady amidst an improving economic and inflationary outlook. This marks the third consecutive time the Fed opted to leave the interest rate unchanged—setting the stage for rate cuts in 2024. Following 11 interest rate hikes in 2022 and 2023, the Federal interest rate is currently at its highest level in 22 years.

XPO Looks to Deploy 28 New Service Centers Following Post-Yellow Acquisitions

Following the acquisition at auction of 28 service centers formerly owned by now-bankrupt Yellow Corp., XPO has announced plans to deploy the service terminals in the coming months. The sale, which a Delaware bankruptcy court approved on Dec. 12, was completed for $870M.

“In LTL, these assets don’t come by often,” XPO CEO Mario Harik told FreightWaves. The service centers purchased are located in regions well-positioned for significant growth, including Georgia, Ohio, and Arizona. XPO will prioritize openings based on facility condition, demand, and the ability to apply XPO branding to existing facility infrastructure.

Following Closure of Key Texas Rail Crossings, Industry Association Calls for Reopening

Following the recent closure by the U.S. Customs and Border Patrol of the cross-border rail crossings at Eagle Pass and El Paso, Texas, the Intermodal Association of North America (IANA) is calling upon officials to reopen the crossing, which plays a vital role in North American logistics amidst a historic nearshoring boom.

“As evidenced during the recent pandemic, any single impediment to the movement of cargo reverberates throughout the entire supply chain,” the IANA said in a Dec. 19 statement. “The prolonged closure of these pivotal transit routes for goods disrupts the equilibrium that is indispensable to the smooth functioning of the freight supply chain.”

Amazon to Lower Merchant Referral Fees on Low-Cost Apparel Items

Amazon is planning to reduce merchant referral fees for lower-priced apparel items. The decision, which goes into effect on Jan. 15, will result in a drop from 17% to 5% for items priced under $15. For items between $15 and $20, referral fees will fall from 17% to 10%.

“We are excited to provide sellers with more transparency and more control over their fulfillment costs,” Amazon said in a Dec. 5 press release. “On average, this year’s fee changes are significantly less than those announced by other major fulfillment services, and many sellers will see a decrease in the average fees paid to Amazon per unit sold.”

As Ocean Carriers Push to the Skies, MSC Adds New Aircraft and Route

As more ocean carriers branch into the air cargo sector, MSC has announced its purchase of a third 777 freight carrier. The carrier will contribute to MSC’s growing weekly air cargo portfolio and fly a new route between Dallas and Hong Kong.

“This latest 777 Freighter delivery accounts for a strategic addition to our MSC Air Cargo fleet, enabling us to address the market’s constantly changing demands and reinforcing our commitment to enhancing trade connections for our clients,” said Jannie Davel, SVP of air cargo at MSC, in a statement obtained by Supply Chain Dive.

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