NEW YORK — FedEx Corp. indicated Thursday that the global economic recovery remains uneven. While strength in international shipments is boosting net income, FedEx is cutting 1,700 jobs in its U.S. freight business to offset losses there.
The world’s second-largest package-delivery company did raise its financial outlook after it said first-quarter net income doubled. But projections for the second quarter and full year fell shy of Wall Street expectations.
FedEx shares dropped almost 4 percent.
International air shipments have driven FedEx’s results for more than a year; international revenue rose 24 percent in the quarter ended Aug. 31. But while FedEx earned $380 million in the first quarter, the FedEx Freight segment lost $16 million and has been unprofitable for four straight quarters.
The unit moves large items such as refrigerators and other large appliances from factories to retailers and competes with other large trucking companies such as Arkansas Best and YRC Worldwide, which runs trucks under the Yellow, Roadway and New Penn names. Sluggish demand, combined with the heated competition in this segment of the U.S. shipping market, has forced FedEx to forgo the rate increases that are helping its other segments grow.
The freight unit, started in 2001, is separate from FedEx Ground, which trucks packages directly to consumers.
FedEx will combine its FedEx Freight and Fed Ex National less-than-truckload operations on Jan. 30 and close 100, or 20 percent, of its service centers. The 1,700 job cuts represent about 5 percent of the freight division’s workers. Overall, Fed Ex has about 280,000 employees.
