FedEx shares surge as investors cheer resilient demand, higher profit forecast
BNN Bloomberg
FedEx shares surged about 10 per cent before the bell on Friday, after the package-delivery giant raised its full-year profit forecast and signaled steady shipping demand despite geopolitical tensions and surging fuel costs.
While the U.S.-Israeli war on Iran has increased air freight rates and forced re-routing of flights, FedEx, considered a bellwether for global trade, said demand in the first two weeks of March tracked expectations for a continuation of third-quarter trends.
Rising oil prices could still feed through to shipping costs in the coming weeks. FedEx has said its fuel-surcharge mechanisms continue to absorb most of the impact.
Rising oil prices can actually help FDX as it relates to fuel surcharges," Evercore ISI analyst Jonathan Chappell said.
However, higher shipping costs could prompt customers to trade down from premium Express services to more economical delivery options.
FedEx, which operates the world’s largest cargo air fleet by aircraft count, has suspended most of its Middle East operations and is re-routing shipments. However, it has benefited from continued growth on Asia–Europe routes, where it has redeployed capacity from Asia–U.S. lanes.
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