FedEx Optimistic on Shipping Demand Amid Rising Fuel Costs as Stock Rises
FedEx Shares Rise on Improved Outlook Despite Regional Tensions
Shares of FedEx saw a significant increase in extended trading on Thursday, driven by the company’s announcement that it anticipates slightly better sales and profits for the current year. This positive outlook comes despite ongoing concerns about potential shipping disruptions caused by the conflict in Iran and rising fuel prices.
FedEx’s stock was up 9.2% in after-hours trade, reflecting investor confidence in the company’s ability to navigate these challenges. During the earnings call, CEO Raj Subramaniam emphasized that demand trends are expected to remain largely unchanged during the fourth quarter, which runs through May. He also noted that the impact from fuel costs would be relatively subdued.
The Middle East represents only a small portion of FedEx’s total sales, according to the company. CFO John Dietrich mentioned that the company’s outlook assumes a “modest headwind tied to business impact in the region.” Brie Carere, FedEx’s chief customer officer, added that the company is not anticipating any major disruptions due to the Middle East conflict. She highlighted that FedEx has implemented surcharges to offset fuel cost fluctuations and other expenses, helping to maintain profitability.
Focus on Fuel Prices and Market Conditions
Before the earnings report, Wall Street closely monitored oil and fuel prices, as FedEx relies heavily on gas for its trucks and planes. The war in Iran has led to higher oil and gas prices, disrupting shipping operations in the Middle East. Earlier this month, FedEx resumed pickup and delivery services in the region after halting some operations, though it warned of potential shipping delays.
Despite these challenges, FedEx remains optimistic about its financial performance. The company now expects a sales growth of 6% to 6.5% for its 2026 fiscal year, an improvement from its previous forecast of 5% to 6%. Additionally, FedEx plans to permanently cut more than $1 billion in costs this year, surpassing its earlier target of $1 billion. This cost-cutting initiative is part of a long-term strategy to streamline operations.
FedEx also raised its full-year earnings per share forecast to between $19.30 and $20.10, compared to its earlier estimate of $17.80 to $19.00.
Navigating Post-Pandemic Challenges
The conflict in Iran follows a period of reduced shipping demand since Russia’s invasion of Ukraine in 2022. During this time, prices for raw materials and home essentials surged, leading to a slowdown in product orders from both individuals and businesses. In response, FedEx has focused on cost reduction and improving network efficiency.
The company is also involved in legal proceedings related to a tariff refund following the Supreme Court’s decision to strike down President Donald Trump’s emergency-powers tariffs last month.
Strong Q3 Performance and Future Plans
FedEx reported strong results for its third quarter, with revenue reaching $24 billion—surpassing analysts’ expectations of $23.49 billion. Adjusted earnings per share were $5.25, exceeding forecasts of $4.15. This performance highlights the company’s ability to increase pricing per package in both the U.S. and internationally, alongside a rise in U.S. package volumes.
FedEx is also moving forward with its plan to spin off its FedEx Freight segment into a new publicly-traded company, scheduled for June 1.
As of the close of trading on Thursday, shares of FedEx had gained 44.6% over the past 12 months, indicating strong investor confidence in the company’s future direction.
