Trade uncertainty has cut deep into FedEx confidence

FedEx shares fell more than 6% on Wednesday after the logistics group issued a weaker-than-expected profit forecast for the current quarter and withheld full-year guidance, citing “volatile” global demand and rising trade friction between the U.S. and China.

Chief Executive Raj Subramaniam told investors during an earnings webcast that “the global demand environment remains volatile,” pointing to renewed geopolitical and policy risks that have disrupted transpacific shipping and clouded economic visibility.

The lack of a full-year earnings or revenue outlook was enough to rattle investors—and not just in the transport sector.

“This may result in some consternation in the markets beyond just the fortunes of FedEx itself,” said Russ Mould, investment director at AJ Bell.

The read-across effect was immediate: shares of UPS dipped 1%, while Deutsche Post’s DHL shed nearly 2%.

While the company delivered better-than-expected Q4 earnings—helped by cost reductions and improved export volumes—the market reaction underscores how FedEx, often treated as a proxy for broader economic activity, is flashing warning signs.

Michael Ashley Schulman of Running Point Capital Advisors likened the company to a macroeconomic diagnostic tool:

“FedEx is like the economy’s Fitbit. Express shows business demand, Ground tracks e-commerce, and Freight reflects industrial strength. Right now, all three are looking sluggish.”

Tariff Turbulence Returns

The earnings call came just weeks after the Trump administration imposed—and later scaled back—punitive tariffs on China. The initial move, a 145% rate introduced in April, has since been reduced to 30%, but the impact lingers.

FedEx executives noted that the company is particularly exposed to China, and the latest trade actions have added pressure.

A key blow came from the revocation of duty-free status on direct-to-consumer shipments under $800, a category dominated by Chinese retailers like Temu and Shein.

“The biggest hit is from the Trump administration ending duty-free status for direct-to-consumer shipments,” said Brie Carere, FedEx’s Chief Customer Officer.

Those shipments had previously been a reliable growth engine for FedEx’s Ground business, linking American consumers with low-cost Chinese e-commerce platforms.

Now, with the tariff structure in flux and cost-sensitive volumes under threat, that tailwind is turning into headwind.

Cutting Costs, Bracing for Uncertainty

Despite the external pressures, FedEx posted a solid finish to its fiscal year ending May 31. The company’s operating margins improved, supported by an ongoing cost-cutting drive. But even that was not enough to lift sentiment.

“FedEx’s cost cutting drive is continuing, but it’s clear that it’ll face more challenges ahead amid ongoing trade unpredictably,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

The message to financial leaders and market watchers alike: while the underlying logistics engine is still functional, the path forward is increasingly uncertain.

With freight demand softening, international routes becoming more politically charged, and consumer patterns shifting rapidly, earnings stability may remain elusive.

And in the absence of full-year guidance, that uncertainty now carries a price.

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