Financial storm clouds are gathering worldwide as some of the biggest shipping companies warn regarding sliding global trade.
US shipper FedEx and Danish shipping giant A. P. Moller-Maersk A/S have been singing about emerging signs of a worldwide slowdown. Both of these companies are widely seen as a barometer for global trade.
The latest to warn about weakening economic growth is FedEx CFO Michael Lenz telling an audience Wednesday at the Robert W Baird Global Industrial Conference the fact that company has reduced flights and parked planes to slice costs in response to soft demand for package delivery.
Seem, we absolutely will realize more of the structural cost savings in the second half of the year. That is certainly where you get more of the advantages start to roll in principally from — at Communicate, the flight reductions.
When you park the aircraft, particularly the older airplanes that we’re packing, you’re deferring a servicing event, which is a significant expenditure. While at the same time, you have relatively reduced ownership costs on those.
So it’s an operationally and financially flexible way to manage capacity generally there. So as I said, jooxie is projecting a lower demand view for the foreseeable future here.
I don’t have an ideal crystal ball to say what the overall macro environment will be. Don’t have a full year cash flow outlook for FY ’23. So I don’t have any specific projection to give you there, but be assured, as some of these specifics that I was highlighting illustrate, we have been fully committed to continuing to take the actions we need for changed expectations of what the working environment is. ”
Lenz offered more details about how many household and international flights had been reduced:
We’ve eliminated roughly 8 or 9 international frequencies, about 23 household frequencies thus far that were — came into the schedule alter we did in Oct. We’ve got another 8 or 9 domestic frequencies that will go in, in November.
The cost-cutting measures align with the firm’s surprise earnings pre-announcement within mid-September about macroeconomic weakness worldwide. At the time, it mentioned it was withdrawing its fiscal year 2023 earnings forecast.
FedEx CEO Raj Subramaniam then went on CNBC’s Jim Cramer’s evening show and warned Wall structure Street analysts and investors about a global slowdown, suggesting a global recession was forward.
And it’s really not FedEx. Maersk, the world’s largest owner of container ships, lowered the outlook for the growth associated with 2022 global container demand, forecasting 2023 could be worse. There are even reports that the organization is canceling sails.
“ There are plenty of darkish clouds on the horizon , ” the company wrote in its most recent earnings report, adding, “ this weighs on customer purchasing power which in turn effects global transportation and strategies demand. ”
The latest from the IMF’s World Economic Outlook plus World Bank’s Economic Prospects is a downshift in worldwide economic growth with high inflation, i. e., stagflation.
Then your UN Conference on Trade and Development warned global central banks are trekking interest rates too aggressively, that could trigger an economic crisis.
Keep an eye on JP Morgan’s consolidated global production PMIs that just entered a contraction.
All the rate hikes by global central banking institutions this year have a 9-12 month lag before hitting globe trade. So this all might indicate 2023 could be a disastrous year for the worldwide economy.
Joy Reid gaslights America, claims inflation is a Republican invention .