What Recession? FedEx Sees eCommerce Leading Growth


After closing out a record fourth quarter and fiscal full year, FedEx turned its sights on the year to come, telling investors that it does not foresee a recession but is expecting low single-digit volume growth in package deliveries led by continued outperformance of its eCommerce customers.

The comments from the Memphis-based delivery and logistics firm were well received on Wall Street and the retail industry which both value the unique global economic perspective that this 50-year-old multinational business provides.

“There’s a range of outcomes that we are ready to deal with, but we’re definitely not assuming a prolonged deep recession. That’s not what we’re assuming,” FedEx CEO Raj Subramaniam told investors Thursday (June 23) evening following the release of its fiscal Q4 and FY 2022 results.

While saying the company was prepared to lower its forecast and guidance and had built-in “the necessary flex” to do so, the newly appointed CEO — who took over for FedEx founder Fred Smith June 1 — said that was not his expectation, even though the current operating environment remains challenging.

“As we look ahead to fiscal year ’23, we expect the macroeconomic risks, both in the U.S. and globally, continue to put stress on supply chains and trade,” he said, noting the addition of several tech-based initiatives that were driving increased productivity in its package processing line and dock operations, as well its ongoing efforts to optimize last-mile delivery.

Stores and Spending

In bolstering the company’s trailing results and forward-looking forecast, FedEx Chief Customer Officer Brie Carere, who was named to that role last week, told investors on the company’s earnings call that a consumer shift back to more in-store shopping would put pressure on D2C shipping volumes that have spiked over the past two years of COVID.

“We anticipate consumers will keep spending and their spending will continue tilting towards services from goods and we expect more consumers to return to stores,” Carere said of the year-ahead forecast.  

To that point, Carere said FedEx expected to see an elevated pricing environment, in the U.S. and globally, that would continue to reflect systemic changes in consumer behavior — especially in eCommerce — saying that the surcharges the company imposes during periods of peak deliveries would be a “durable change for the industry.” 

At the same time, Carere added, the company’s policy of adjusting its fuel surcharges weekly in response to market rates would also continue. 

“We’re very clear eyed about the economy in which we’re operating when we said ‘normalized economic environment’ and that we’re not planning right now in our current forecast for a recession,” Carere said, reiterating that FedEx has prepared plans to manage through a slowdown if necessary and make use of the hard lessons learned over the past two years.

“We still believe in the secular growth of e-commerce,” she said, noting that as a percentage of total retail sales, eCommerce was at about 21% up from 16 or 17 percent pre-COVID.

“So, we still believe that ground has the largest growth opportunity and that is reflected in our range for this year, with Ground growing faster than Express,” she said.