FedEx Outlook Rosy Despite Ongoing Threats From Cybercrime, Trade Restrictions

Employees drive carts on the tarmac past a cargo plane waiting to be loaded with shipments at the FedEx Corp. distribution hub at Los Angeles International Airport (LAX) in Los Angeles.
Patrick T. Fallon/Bloomberg News

FedEx “has never been stronger,” although cybercrime and threats to restrict trade pose challenges, company founder Frederick Smith said Sept. 25.

The chairman and CEO struck a bullish note in remarks at the annual stockholder meeting in Memphis, declaring, “Fiscal 2017 was a great year for FedEx, and we’re optimistic about the future.”

FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest North American for-hire carriers.

With record profits and shares consistently trading at all-time highs, there was little to contradict Smith’s positive assessment.



RELATED: FedEx quarterly profits decline on TNT cyberattack, Hurricane Harvey

Shareholders re-elected Smith and 11 other directors and shot down a handful of proposals that dissenting groups touted as attempts to improve corporate governance.

Teamsters back lobbying report

One proposal would have required an annual lobbying activity and spending report.

The International Brotherhood of Teamsters said its proposal would have encouraged “transparency and accountability in FedEx’s use of corporate funds to influence legislation and regulation.”

The union, which has been working to organize FedEx units, including FedEx Freight, said FedEx spent nearly $25 million on federal lobbying in 2015 and 2016.

But the National Center for Public Policy Research sent a representative to the meeting to denounce the proposal as a liberal attack on free speech and free association.

Also defeated was a proposal designed to make it easier for shareholders to nominate directors.

FedEx stock riding high

Smith assured stockholders that FedEx would continue its focus on investment, integration and innovation. Burgeoning e-commerce, particularly growth in residential e-commerce, is driving a lot of the investment and innovation.

Before the holiday peak season hits in November, FedEx will have pickup and drop-off capability at nearly 8,000 Walgreens as part of its FedEx OnSite network. Customers can better manage shipments with their mobile devices using FedEx Delivery Manager.

FedEx topped $60 billion in revenues and posted record earnings for the year ended May 31. The stock has been trading above $200 for months and has ranged as high as $222.71 a share.

Smith mentioned cybercrime and trade restrictions as potential headwinds.

“Even with the achievements of (fiscal 2017), we must manage some big issues that have significant consequences for our business,” he said.

FedEx wants open trade, tax reform

“We’ll continue to advocate for open trade, tax reform and infrastructure upgrade. The right approach on these issues will mean a more prosperous outlook not only for FedEx but for the United States and the world as a whole,” Smith said.

The company has lobbied the Trump administration to soften opposition to foreign trade agreements.

FedEx last week reported a $300 million bite out of earnings from a June malware attack on its TNT Express unit. FedEx officials said they believed the attack was the result of a nation-state targeting Ukraine and companies that do business there.

Smith said, “Cyberattacks continue to be a major and ongoing challenge. The world has changed, and cyberattacks are more destructive and virulent than ever. The attacks are coming from nation states as well as criminals and anarchists.”

“Having fought the recent battles that affected our business, FedEx is better prepared than ever to safeguard our systems and information. We’re collaborating with the best cybersecurity firms in the world and deploying the best cybersecurity tools,” Smith said.

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