FedEx Lowers Earnings Guidance
Submitted by
CalculatedRisk on Fri, 05/09/2008 - 12:13pm (59 comments)
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Thank goodness they are the only ones that use petroleum-based fuels.
Haven't these guys figured out how to hedge against oil price increases? And assuming they have, isn't mostly about something else?
it's possible that they didn't hedge against 50% increases.
with more to come yay!
This cant be true Core inflation is in check...move along...
HRB must have been close to the brink:
OTS relaxes H&R Block capital requirement - Kansas City Business Journal:
Sixth?
"This revised outlook assumes no additional increases to the current fuel price environment and no further weakening of the economy."
In other words, you'll be hearing from us again.
We are getting ready for a non-linear market dislocation step, effected by the price of oil...
Have you ever noticed the solid-white arrow in the FedEx logo (between the "E" and the "x")?
I never did until someone pointed it out to me, and now I cannot help but see it whenever I look at the logo.
Kind of like how I feel watching finance news after reading this blog.
Another nuthinburger.
Seb and I will instead focus on the surprisingly good jobs numbers this week. Nevermind how they were calculated....
Haven't these guys figured out how to hedge against oil price increases? And assuming they have, isn't mostly about something else?
if you have'nt yet learned... the hedge is sold by a sophisticated player intent on somehow getting at the mark's generous cashflow's. I've heard GS is real good at it.
"In other words, you'll be hearing from us again."
I was just thinking, "Wait, didn't we hear lowered guidance from Fedex recently?"
Put that in your pump monkey pipe and smoke it.
"This revised outlook assumes no additional increases to the current fuel price environment and no further weakening of the economy."
umm, we've now reduced our reliance on historical trends to 0.0 seconds. OK. This will work well. Either that, or short-term planning is now reduced to 0.0 seconds in the other direction. Or both - it's clearly not an XOR. umm, still. Did the entire space-time continuum just implode into a black hole or is it simply the Economic GNAB GIB? In any case, carry on, I'm sure it's all been priced in.
"umm, we've now reduced our reliance on historical trends to 0.0 seconds."
Estimates have to be based upon some assumption(s). He's just telling you his biggest assumptions.
It seems like everywhere I turn lately, I see those DHL employees wearing the yellow and red outfits.
Yesterday, I was walking down Park AVenue at 9 o'clock in the morning and I must have passed 50 of them pushing their carts down the street(no oil there).
I think DHL is starting to eat away at FedX's corporate account biz. I don't think FedX can pass through all their fuel costs to corporate customers unless DHL is doing the same.
Oil at $126 is good news, now when it drops back to $115, stocks will rally.
I knew it had to make sense and conform to generally accepted business practice. Thanks for the clarification. Clearly my non-MBA degrees are worthless.
On an earlier thread I posted this, but it seems appropriate here.
Chicago cabs have been authorized to charge a flat $1/ride fuel surcharge regardless of distance.
On a ride in from OHare where the cab might burn 1+ gal of gas, that might be fair. But around the loop and near NWS sides where the distance is never more than 2-3 miles? All that burns is my ass.
Anything similar in other cities?
Maria, CNBC Seer, just does not ever seem to get anything. I am sure she is a sweet heart, but who the heck writes her stuff? Greenspan?
"All that burns is my ass.
Anything similar in other cities?"
No Ethan, the only place your ass is burning is right there in your home town - and put me down as glad as hell about it...
viewing with alarm:
Why do you think they hired her?
Gab:
Thanks for the kind response ... so full of useful information.
Ethan you should walk.
Ethan,
There's this company in Chicago that ferries people around both downtown to the airports and the suburbs. It's called the CTA, check it out.
Walk? Yeah, the grocery store is approximately 40 feet from the back door of our building; the drug store across the street; church about 5 minutes on foot; can't be beat in my book.
Actually, being over 65, both my wife and I can ride the CTA for free. Which I do to get to work ... yeah, not retired yet ... but after a day at work and several hours at the Art Institute, we usually like to take cab home.
Sorry about that. I'll try to do better next time.
Alex:
You gonna promise to do better? Or just be a snark all your life?
Ok, you can cab it.
Ethan:
Your lucky you live in Chicago. In Detroit, it's $5 just for protection in the cab.
.
tough crowd today Ethan. I believe your carbon footprint is nil from your post. Keep up the good work..
Thirtieth?
Haven't these guys figured out how to hedge against oil price increases?
Sure. Hedges aren't open-ended, though. Looks like theirs have finally run out.
OT -- I was thinking there should be a $1 national tax on all cups of coffee. It would go a long way to help bailout all the IBs. What do you think?
OT - Friday night bank failures, wherefore art thou?
FFDIC promised a double feature tonight. I've got my fridge stocked with beer and plenty of popcorn, bring on the entertainment!
CR, you don't say much about oil -- understandable given your focus/expertise -- but at what point do you see this continued march upward for oil affecting your "shallow recession" call.
I expect oil to fall/moderate at some point with the weakening economy. But if it really is a supply issue (and I think it is, with speculation and the weaker dollar playing smaller roles), it could "moderate" around $100... still pretty painful.
Elvis-
I think you should burn in hell for even suggesting such a thing.
Disco, disco, disco dance machiiiiine, disco, disco................
Is UPS next???
So, does this mean FedEx's stock should skyrocket before Monday's opening bell?
OT
This American Life does Subprime:
This American Life
I doubt if there is much that is new, but it should be entertaining. They did a short segment on All Things Considered, and they interviewed one guy that had a $450k loan, and the guy said he would have never loaned himself the money. Worked 3 part time jobs. He didn't act like a victim.
Nemo, I never noticed that arrow before either. Neat.
Wonder what the time lag for the effect of the volatile sectors (energy, food) to spread to / infect "core" inflation is.
Maybe FDX can just focus on core inflation and everything will be alright.
tj & the bear writes:
Haven't these guys figured out how to hedge against oil price increases?
Sure. Hedges aren't open-ended, though. Looks like theirs have finally run out.
Good point. Not to mention hedges have a hefty cost. There is a limit to hedging. Its used to smooth fuel prices, it cannot fight the climb.
Nor could FedEx keep growing if they were 100% hedged. Resources are finite. They could buy 77F's or hedge fuel. Doing either one reduces fuel costs (the 77F's burn less fuel and carry more cargo than the MD-10/11 freighters. And yes... they DC-10's were converted to a MD-10 with the new cockpit avionics).
Got Popcorn?
Neil
If the states begin requiring online retailers like Amazon to charge sales taxes on purchases, I'd expect FedEx to take another hit as online shopping declines. If shipping fees aren't offset by "no sales tax," people will go back to buying locally.
Ethan,
I'll do better than snark, if things go right I'll be putting things into your mind to the point you'll never want to ride the El or take a PACE bus ever again.
Elvis writes:
OT -- I was thinking there should be a $1 national tax on all cups of coffee
CA is considering a flat tax of $1.95 per 6 pack of beer and $2.50 on a 12 pack....
Maybe FDX can just focus on core inflation and everything will be alright.
Bobby
Gotta go get a paper towel and whipe my 'puter screen
Nice one! LOL!
I thought they made their contract drivers eat the
fuel costs.
Wonder what the time lag for the effect of the volatile sectors (energy, food) to spread to / infect "core" inflation is.
Gary
Roughly a year, depending on the sector.
Roughly a year, depending on the sector.
R. Manhammer | 05.09.08 - 6:34 pm | #
And the market... there are two factors to pricing: supply & demand and the 'elasticity' between the two. So some items you begrudgingly pay more for anyway... some you are more inclined to go without (demand destruction).
So price inflation won't be the only effect we'll see a year or so from now - we'll see (and are probably already seeing) demand destruction too. That isn't all terrible in a society that already consumes way more than it produces.
One of the nation's largest trucking companies is capping its drivers' speeds at 60 mph, a move designed to save fuel and protect the environment.
Schneider National Inc. expects the change to save the company nearly 3.8 million gallons of diesel fuel a year. It also will reduce carbon dioxide emissions by more than 40,000 tons, according to the Green Bay-based company.
"Sixty miles per hour is our sweet spot," company spokeswoman Janet Bonkowski said. "In order to meet our responsibilities to our customers, our drivers and the environment, 60 is where it all came together."
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
Low rider drive a little slower.
Anonymous writes:
One of the nation's largest trucking companies is capping its drivers' speeds at 60 mph, a move designed to save fuel and protect the environment.
There are highways in this country where you ought to be required to have your caution lights flashing and display a big orange and yellow triangle on the back of the vehicle if they drive that slow.
ANB Financial closed; third bank failure of year
ANB Financial closed; third bank failure of year - MarketWatch
Oil going to 126$/bl is the best possible news for the US. Hopefully oil will continue increasing to at least 200$/bl and will cause demand destruction on a massive scale. This is the only way that we will finally get off of our oil addiction. Thirty years too late in my opinion.
Sixty miles per hour is our sweet spot," company spokeswoman Janet Bonkowski said. "In order to meet our responsibilities to our customers, our drivers and the environment, 60 is where it all came together."
Gee, I wonder if they upped the driver's pay rate. Or do they pay the same amount per mile? If so, their drivers just took a pay cut. I wonder how many of their drivers will be looking at the other over-the-road companies now.
Our company is looking at how rail might fit into the shipping equation. Lots of issues to consider but they are looking.
By the way, a casual look at the shelves of the local Sam's club suggests they are limiting the purchase of rice by not stocking it on the shelves at all. That makes rice and powdered milk that I can no longer get at Sam's.
"Wonder what the time lag for the effect of the volatile sectors (energy, food) to spread to / infect "core" inflation is.
Gary
...
Roughly a year, depending on the sector.
R. Manhammer"
The economist party line is that headline inflation has no predictive power versus core; but it does work the other way. They point to oodles of econometric research "proving" the point.
I'm skeptical; the analysis appears to have been driven by the results in the secular downtrend of oil prices in the 1980-1990s.
The one year time line mentioned by Manhammer sounds about right for goods/services that have a lot of direct or hidden dependence upon on energy. However, that could easily be offset by downward labor pressures, which is still the largest component of business costs.
Wages will not rise as fast as gasoline/food prices. If energy demand is not destroyed as fast as prices rise, consumers will have less money to spend. (No savings buffer; credit cut off; but the tax rebate will go straight into the gas tank). That will crush incomes/profits in the non-energy/food sectors, and so businesses may not be able to raise prices.
Also, the housing glut may put pressure on rents, which are effectively 30% of CPI.
In the 1970s by contrast, there was environment of strong rising nominal wages, and union power to index incomes. Unless Sebastien is right and the economy is going to roar ahead, I don't see workers having that bargaining power.
Bondguy,
I don't expect much downward labor pessure, but then again I don't think there's gonna be ANY upward pressure.
Re: labor costs
I think that comes down to manufacturing v non-manu v service. in how energy costs will be able to be passed up the chain.
Nice stating point to ponder nonetheless.
I thought 60 mph was supposed to be the speed limit for trucks, at least in Washington state. It's 55 in Oregon and California.
Ok, a lot of states don't have lower truck limits. Still, the whole west coast is 60 or lower....
Speed limits in the United States - Wikipedia, the free encyclopedia
I found your blog rather interesting and even more useful. You were talking about shipping options. At the present time, they are very numerous and diverse. However, I think that fedex would be a good choice, since they offer better conditions to the clients compared to other shipping companies, like UPS or DHL, for example. I have also found from Pissed Consumer - Consumer Reports, Complaints and Company reviews that fedex offer free delivery services in certain cases.