FedEx, UPS signal global recession as trucks to containers slump

Bloomberg Market Specialists Yasumasa Nakagomi, Carl Lou and Dennis Ting contributed to this article. The original version appeared first on the Bloomberg Terminal.

Background

The prospect of recession is amplified by the Federal Reserve’s rapid tightening to tame soaring inflation, and is looming large after FedEx Corp.’s withdrawal of its earnings forecast highlighted worsening business conditions worldwide.

The issue

FedEx lost $11 billion in market value last month, wiping out two years of stock gains, after it pulled its forecast, feeding into fears of a global demand slowdown. FedEx rival United Parcel Service Inc. is also forecast by analysts to see drastic declines in U.S. and international package volumes in the next couple of years. Despite still strong inflationary concerns, the spot freight market for trucks is expected to remain challenging. Also, mentions of recession in stories in July exceeded those in March 2020 as concern over a growth slowdown intensified.

Tracking

To see analyst forecasts for UPS’s domestic and global packages, run UPS US Equity MODL SOURCE <GO> for UPS Package Forecasts. UPS’s international package growth (orange) is forecast by analysts to tumble through fiscal 2024.

To see the profitability of truckers operating in the spot market, Run BI 3PLS <GO> to Track Logistics Survey on Demand and Pricing. The Bloomberg/Truckstop.com survey offers insight into demand, pricing and revenue in the trucking and broker industries. Those expecting pricing to rise over the next three to six months fell to 43% in 2Q, having peaked at 59% in 4Q 2021. About 25% of truckers expect pricing to decline, up from 12% in 4Q 2021.

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