(ZEROHEDGE) – The hole that FedEx finds itself in is, in some respects, not of its own digging. It can’t force people to accept job offers, nor can it control the wages its competitors are willing to pay. It can’t stop or slow the unprecedented surge in parcel-delivery volumes that have pulled forward demand projections by nearly three years.
What the Memphis, Tennessee-based giant can manage is the optics behind its competitive response, and how it addresses customer expectations in the process. Therein lies its dilemma. It is no secret that FedEx is plagued with service reliability issues, with about 600,000 daily shipments in its Ground network, or roughly 5% of the unit’s daily volume, being affected by capacity constraints caused by labor and equipment problems. It is struggling to get on top of costs that, in its fiscal 2022 first quarter, spiked by $450 million over the year-earlier period.
However, raising prices to recoup cost inflation, and doing so in an effort to boost profit in an environment of supertight capacity, are two different approaches. According to some industry experts, the impression being formed in the minds of seasoned shippers — many of whom are decadeslong FedEx customers — is more of the latter than the former.
