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FedEx freight volumes from China to the US “deteriorated sharply” in May after President Donald Trump launched his trade war, hitting demand for consumer shipments on the company’s most profitable route.
Shares in FedEx, the express parcel delivery company long seen an economic bellwether, fell nearly 6 per cent on Wednesday after the company said that it expected trade between the countries to remain “pressured” in the current June-to-August quarter.
“We just simply cannot predict how that is going to play out,” Brie Carere, chief customer officer said, as she told investors on a results call, adding that the China-US route represented 2.5 per cent of the company’s revenue and that the trade lane was its most profitable intercontinental route.
Carere added that the “vast majority” of the effect on trade was the result of changes to the de minimis customs rules, which exempted imports of individual items worth $800 or less from tariffs and were heavily used by China’s ecommerce giants Temu and Shein. The exemption was abolished by the Trump administration.
The remarks from FedEx, which said it would only share its outlook only for the current quarter due to the “uncertain global demand environment”, are the latest indication of the severe effects on global trade of Trump’s erratic policies.
The Trump administration in April announced tariffs as high as 145 per cent on goods from China. While the two sides subsequently agreed substantial tariff reductions, there remains considerable uncertainty about the outlook for levies between the two countries.
Chief executive Rajesh Subramaniam told call participants that it was “very, very difficult to predict” what would happen over the next 30 to 60 days or further.
“We will see how that evolves and if it’s very dynamic, and at that point we’ll be able to be more prescriptive,” he said.
The company reported net income for its fourth quarter from March to May up 13 per cent on the previous year, to $1.65bn, on revenue of $22.2bn, broadly flat compared with the previous year’s $22.1bn.
The company also predicted revenue growth in the June-to-August quarter between zero and 2 per cent compared with the same quarter in 2024 and earnings per share of between $3.40 and $4.00, excluding restructuring costs, below the market’s expectations.
As well as its flagship express parcel product, FedEx offers a range of other logistics and freight forwarding services. The figures came just four days after the death of Fred Smith, FedEx’s founder and executive chair.
