FedEx is getting hurt by the tight job market.
The package delivery company said Tuesday that its costs are up $450 million in the most recent quarter, as it paid higher wages as it got harder to find new workers and demand for shipping increased. FedEx also cut its outlook for the year, saying earnings will be lower than it previously expected, partly due to the increased costs related to the tight labor market.
Shares of FedEx Corp. fell 4% in after-hours trading.
Competition for hourly workers has become fierce, and many companies are offering higher pay, sign-on bonuses and other incentives. It might get worse during the holidays as companies seek help getting gifts and online orders to shoppers. Online shopping giant Amazon is looking to hire 125,000 people; delivery company UPS is seeking 100,000; and FedEx wants to hire 90,000.
Overall, FedEx said its fiscal first-quarter expenses rose 16% to $20.6 billion. Its profit fell 11%, to $1.11 billion, in the three months ended Aug. 31.
On a per-share basis, the Memphis, Tennessee-based company said adjusted earnings came to $4.37 per share, missing Wall Street expectations by 59 cents, according to Zacks Investment Research.
Revenue rose 14% to $22 billion in the period, beating expectations.
FedEx expects full-year earnings in the range of $19.75 to $21 per share, down from its previous forecast of $20.50 to $21.50 per share.
4 thoughts on “Tight job market causing costs to rise at FedEx”
This is a great example of how “market forces” serve our economy so much more effectively than “government mandates”. Companies pay more because they have to in order to get the workers required to do the job. Both our workers and economy would be far better served if minimum wage were abolished and market forces were allowed to work unfettered.
Mark H, I agree. Aside from the weird hours, it is a great place to work, and I hope they can successfully walk the tightrope of the regulations of the covid issues and the task of managing so many people to execute their business plan.
The minimum wage is largely irrelevant right now, since almost every entry-level low-skill job pays north of $10/hour…most at $15 or so now, as evidenced by the daycare story last week (where daycare operators can’t find people willing to work for $12 anymore).
100% agree. Either pay employees or go out of business. We lost a bunch of employees at my job due to this. They found better paying jobs. I’m sitting on the fence to leave or stay.