We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
FedEx's (FDX) Freight Segment to Furlough a Few Employees
Read MoreHide Full Article
Global volume weakness took a toll on FedEx Corporation’s (FDX - Free Report) operations. As a result, FDX’s freight unit reportedly decided to furlough employees in some U.S. markets.
More specifically, sluggish cargo demand compelled management to take this step. With economies opening up as coronavirus restrictions are withdrawn, the surge in e-commerce demand, evident during the pandemic, slackened. This, in turn, dwindled demand for freight carriers, which is not a welcoming development for FDX. Management had said in September, while releasing the first-quarter fiscal 2023 results, that FDX expects to generate cost savings in the $2.2-$2.7 billion range for fiscal 2023.
However, management’s statement bore a silver lining, suggesting that it "will continue to evaluate the environment and bring back furloughed employees as business circumstances allow." Moreover, some eligible employees will be offered an opportunity to get permanently transferred to the markets with hiring requirements. The freight unit will not stall the health benefits and other financial incentives to the employees being furloughed.
FDX is not the only company to have taken such an action to combat the shrinking demand scenario. Earlier this month, ride-hailing company Lyft (LYFT - Free Report) announced that it is laying off approximately 700 employees or 13% of its staff. Management took this decision due to the economic slowdown.
Lyft had already trimmed its workforce by 60 in July. In response to this downturn, it decided to stop hiring through the year-end. LYFT apart, quite a few tech companies announced job cuts/hiring freezes due to this weakening demand scenario.
In the broader Zacks Transportation sector, investors may consider better-ranked stocks like Covenant Logistics (CVLG - Free Report) and Ryder System (R - Free Report) .
Covenant Logistics offers a portfolio of transportation and logistics services, including asset-based expedited, dedicated and irregular route truckload capacity, besides asset-light warehousing, transportation management and freight brokerage capability.
The gradually improving freight market scenario is a tailwind to Covenant. CVLG’s cost-control efforts are appreciated as well. CVLG currently sports a Zacks Rank #1. The stock has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 10.1% upward over the past 60 days.
Miami, FL-based Ryder provides integrated logistics and transportation solutions. With improved economic and freight market conditions, R is benefiting from higher rental revenues owing to strong demand and favorable pricing. R’s acquisitions of Whiplash and Midwest Warehouse & Distribution System expand its e-commerce fulfillment network and boost multi-client warehousing capabilities. The transactions are expected to drive growth in the supply-chain solutions segment.
Ryder currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for R’s 2022 earnings has been revised 7% upward in the past 60 days.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
FedEx's (FDX) Freight Segment to Furlough a Few Employees
Global volume weakness took a toll on FedEx Corporation’s (FDX - Free Report) operations. As a result, FDX’s freight unit reportedly decided to furlough employees in some U.S. markets.
More specifically, sluggish cargo demand compelled management to take this step. With economies opening up as coronavirus restrictions are withdrawn, the surge in e-commerce demand, evident during the pandemic, slackened. This, in turn, dwindled demand for freight carriers, which is not a welcoming development for FDX. Management had said in September, while releasing the first-quarter fiscal 2023 results, that FDX expects to generate cost savings in the $2.2-$2.7 billion range for fiscal 2023.
However, management’s statement bore a silver lining, suggesting that it "will continue to evaluate the environment and bring back furloughed employees as business circumstances allow." Moreover, some eligible employees will be offered an opportunity to get permanently transferred to the markets with hiring requirements. The freight unit will not stall the health benefits and other financial incentives to the employees being furloughed.
FDX is not the only company to have taken such an action to combat the shrinking demand scenario. Earlier this month, ride-hailing company Lyft (LYFT - Free Report) announced that it is laying off approximately 700 employees or 13% of its staff. Management took this decision due to the economic slowdown.
Lyft had already trimmed its workforce by 60 in July. In response to this downturn, it decided to stop hiring through the year-end. LYFT apart, quite a few tech companies announced job cuts/hiring freezes due to this weakening demand scenario.
Zacks Rank & Key Picks
FedEx currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the broader Zacks Transportation sector, investors may consider better-ranked stocks like Covenant Logistics (CVLG - Free Report) and Ryder System (R - Free Report) .
Covenant Logistics offers a portfolio of transportation and logistics services, including asset-based expedited, dedicated and irregular route truckload capacity, besides asset-light warehousing, transportation management and freight brokerage capability.
The gradually improving freight market scenario is a tailwind to Covenant. CVLG’s cost-control efforts are appreciated as well. CVLG currently sports a Zacks Rank #1. The stock has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 10.1% upward over the past 60 days.
Miami, FL-based Ryder provides integrated logistics and transportation solutions. With improved economic and freight market conditions, R is benefiting from higher rental revenues owing to strong demand and favorable pricing. R’s acquisitions of Whiplash and Midwest Warehouse & Distribution System expand its e-commerce fulfillment network and boost multi-client warehousing capabilities. The transactions are expected to drive growth in the supply-chain solutions segment.
Ryder currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for R’s 2022 earnings has been revised 7% upward in the past 60 days.