FedEx (FDX) 17 Mar 202020 Q3 Earnings call transcript

Good day, everyone, and welcome to the FedEx Corporation's Third Quarter Fiscal Year 2020 Earnings Conference Call. [Operator Instructions]

At this time, I would like to turn things over to Mickey Foster, Vice President of Investor Relations for FedEx Corporation. Please go ahead.

Good afternoon and welcome to FedEx Corporation's third quarter earnings conference call.

XX-Q, at and fedex.com. Form on book quarter website our third earnings stat release are The one This website will about where is the call being replay be streamed available from our year. for

today are us the Joining members on the media. of call

be During to in to all one us like would limited those our allow callers who to to question session, accommodate question-and-answer will order participate.

Certain listeners forward-looking Harbor statements the to take cause implied forward-looking statements. Litigation and the statements Safe other provisions be from I such the results regarding desires Reform the considered uncertainties this as are want by advantage future such in Corporation could Act. which materially to conference call, within or actual act. performance, statements Such expressed that forward-looking FedEx remind Securities factors risks, to of all Private projections of of to subject differ meaning those may

For to this of measures. additional and of factors, the the releases these for on fedex.com financial with SEC. the directly comparable refer most Investor to press our reconciliation non-GAAP the measures please to information website at on discussed Please call Relations refer filings GAAP our portion

Chief CIO; Executive on Brie Mark and and Fred Subramaniam, are Joining COO; and Carter, and Vice call Executive Officer. and Marketing Rob and Allen, Secretary; Communications Information President Smith, Raj and Alan Carere, FedEx Chairman; the us Executive Services, today VP, Counsel Graf, Vice CFO; President General President, President Vice Executive

on quarter. And Smith now his Fred share the will views

for on call. Thanks participating this

the priority, extensive early as June, team decisively addressed change. challenge our January, last with FedEx execution. safety our coronavirus would planning of entered number this and for FedEx. we a beginning FY be our one 'XX picture issue announced and and in year members' the And As

both in customers. globally. donated at have supplies, role those kept a played Let and to within benefit our significant system and concert of the who China with all have thank and praise and supplying is our Post FedEx proud operating in profusely to FedEx medical great me commercial, to China

with worldwide. to continue organizations work We relief

flights With commerce moving. of will we provide to passenger the Atlantic, curtailment across the keep required lift vital the

As FedEx great is are Again, team and crisis our with Americas competently Europe dedication. consideration. the dealing was with our this their in the members and first case Asia, in safety

fourth Regarding which and company, issues, margins these still Express and and significantly retirement forward very the we enterprise. issues, previously of North the remain becoming we successful particularly broader announced: integration; old 'XX FY very shipments; the by be replacement e-commerce completing the able confident TNT will strategic for and FedEx after package focused delivery across profitable most inefficient completing American as growth improving CapEx quarter XXX to funding aircraft while and go lower on

FedEx and several continue Roxo, shipping SameDay based digital the such to think sensor also services work as new initiatives We great which potential. we entrepreneurial on Bot have

ask and comments, Alan Raj their which questions. now me we will Let Brie, your after take to provide

Brie?

Good Fred. you, afternoon, Thank everyone.

I our begin remarks would economic my outlook. normally with

on update forecast. solutions strategy uncertainty an we discuss the withdrawn a changing our I adapt will commercial to have our and will temporarily However, to the given to deliver marketplace we to commercial I in our Then our customers. environment, continuing economic Rather, coronavirus. evolve response innovative the current are provide how for

addressing unprecedented the it are challenge and that an represent and to daily. contain coronavirus The we efforts evaluating

global of this through began we strength plan response As the and crisis unparalleled logistics managing broke expertise. and in implemented the global with network a coronavirus our China,

relief recovery lead both in to efforts. We the are positioned and uniquely the

supporting supplies for our non-profits, our been handling We while front and the have of customers. the and the also lines medical existing of relief on efforts, prioritizing customers humanitarian

millions of This are demonstrating extent our with customers. business who to continued on businesses possible, is our greatest to the small partnership the depend protecting customers' our We especially base us. volumes important

then will demand and manage We customers. new incremental

temporary of for In capacity to influx managed China shipment and maximize amid a implementing utilization. by we limited to transit the our U.S. to surcharge capacity adjusting outbound China our peak requests commitments February, freight shipments

also Total decline. to air China. contributed We XX% spot at dynamically February capacity Mainland belly to prices Wide-body and from early from of adjusted March and to have year-over-year. from reduction XX% is China estimated early to cargo this capacity

week In China, we have of March week week X. since seen over a rebound the

believe stock elevated. urgent stay replenishment capacity need the in and we for with the With air demand shortage market, will

to China to continue spot and profitably. times transit manage adjust outbound prices for We specifically demand

use our in We given continue the service the for to to economy any increase the encourage between time-critical our and market. premium services premium shipments, volatility of transit differentials the

started relief recently since now between implemented a and travel impact US global. unfortunately approximately recovery of cargo as significantly The in Europe is and Europe between China expected is and the capacity flights. ban to What air on US the capacity passenger effort are freight XX% the

manage in us peak helped and they constraints parts required. spot world China, as the dynamic strategies and leverage management transit other extensions, We also that now will for are and specific the lanes in time are of of same demand time including price surcharges capacity employing have periods

enhanced intra-European we ground dynamically adjusting and the border network, in controls, we've extended some lockdowns business, air run lanes, of our Due areas times. continue For and to our we transit networks. our to some and are

due multiple not markets, in reduction fewer in for to we businesses open are being As volume seeing and a orders delivery. close simply businesses

FedEx been Europe, especially freight bright however, long-term There to pull consumer the of prospects about sector a broader from coronavirus, our let QX subdued Now Europe. in numbers, the strides I growth toward were BXB interoperability Prior and we make air optimistic, in back. peak networks. market. very in as our driving the the am BXC spot, especially me TNT had

we the a the business than QX, faster been the to in parcel of year-over-year, segment mix While focus priority. grew on with deferred at growing international pressure, European In our of growing continue rate Freight our European under parcel network. significant our has volume

sales a high at months. remains and and all pipeline pace seeing sales segments, momentum nine Our across the for growth continued European year-over-year marketing teams opportunity, with our are past

previous business more than brand year, than quickly more traffic are adding has e-commerce XX% than In customers. customer volume. generated is these QX, the this XX,XXX opportunities, more successfully have team been wins. our the More year. we X,XXX FedEx new sales e-commerce of new Nearly wins XX% in In closing past half Europe export international than of

million for of part metrics a Xx utilize languages. markets across growth in tool rate As show European business our their the creating have key quote Early shipment X customers to shoppers at in XX application. previous conversion countries new now Manager rate shipping we a seven to international a Delivery launched label strategy, digital XX small shipments. e-commerce FedEx manage from Almost

XX,XXX 'XX And, competitiveness Europe for years to locations convenience Europe. we enhancements grown strengthen network our to across retail our in position FY over Combined, success and come. us very these have well in also for

FedEx delivery Now home. FedEx of residential When XXX began delivery January, me more to to million pivot seven-day closer more let in powerful. people, e-commerce delivery became industry-leading Sunday Ground Ground GDP. least of two volume Ground. of volume US than been network our is which by package in its or XX% one than includes proposition in of even faster at day, value Home being transformation, XX% FedEx our to day than seven has resulting more Delivery delivered locations days XX% accelerated Because encompasses less. UPS more

to and on deliver our since advantage of shipments now population Delivery net Sundays, most Home the for fact, we the Saturdays increases week. In US throughout speed our

Let me explain.

XX% more on For Monday, than on picked packages XX% up are packages now by picked we're Friday than and Ground. UPS, UPS faster faster up approximately the Friday, than

at are pairs. For and services, both in one our million faster our Home FedEx Ground we XXX least Delivery commercial day FedEx ZIP

FY strongly ground is softness pressure in part linked 'XX we believe however some experienced In due to have the we the which to commercial volume yield economy.

time delivering both and day share create in transit continues service superiority and our customers, significant to exceptional However, large. while value market improvements small seven growth for

strong. Ground FedEx Currently, our are volumes

customers' Our largest rising as home. volumes social from shop retail consumers distancing are efforts encouraging to are

a on past Finally, the volume done industry have the the over job Freight in amazing has growth, to slowing business. due volumes team economy. revenue and LTL turning to our quality. reduction pressure Despite driving freight experienced FedEx year an the

that support and our solutions have includes very a across value comprehensive end-to-end customers. enterprise strong We our proposition a our for portfolio of

turn I'll Raj to his for over remarks. that, it With

Brie, afternoon. Thank good and you,

the efforts. has team tirelessly the of working and relief global Our mitigate coronavirus to effects on been in our assist business

that focused foremost during and who has need and companies the first of this few more network keep capabilities global the team is moving safety to in are in the XXX,XXX aid than and world our and on FedEx one of We commerce time. support our customers members assistance.

effective supporting manner. We we safe and view are of and role communities responsibility and a And this the we keenly it as duty our and in continue fact our customers aware to play.

We preparation, and are laser focused response. on relief mitigation

combat working We to of multiple worldwide. virus the ways on in have both with we countless fronts, examples and remarkable the are US customers

relief extensive hospitals, to over our providing protective labs, centers China to personal gloves, addition are efforts delivery months, kits, and few the testing of homes. the States, support equipment United In test including and within we the in masks, last

public-private As nationwide. many of our and medical partnership customers, working are part clinics we labs to deploy with of a to supplies healthcare rapidly

our who supplies Roche Herculean For getting this contain curve, worked global essence Time promote And This of across save is at respond our it signature to are the labs clock we this virus efforts requirements their weekend, keeping to providers flatten testing one way. comes safety critical forefront of lives. to of to to working United with the kits have under the healthcare team We're to the the and around many Diagnostics to suspended designated example, and social members just the distancing. deliver States. medical and operations pandemic. test over is products when

of unprecedented what am who do. in in rallied we emphasize are This enough proud we of the cannot situation. which and how have I face together this manner people I is the our clearly

thing of times certain. During uncertainty, one is

FedEx promise. purple the upon delivers

business a of network, also our uniquely being volumes the networks on of down to February are rebounds. the economy we size play Coronavirus and as impact FedEx and global Asia in significant other manufacturing Given scale resulted lowered in in role a and as the result. recovery shut factories sectors in positioned

are reflected third earnings. in our quarter numbers These

China the and manufacturing In contrast, to while FedEx constrained. XXX However, in especially of of and last normal continue Guangzhou. be couple full and out week, in the with registered flight record our passenger back, capacity our come which load past has the factors schedule our severely with we aligned to weeks been have airlines on belly flights just over flew started flights is have hub in intra-Asia,

Now the theater. turning transatlantic to

passenger capacity last between significantly capacity Europe curtailed. of passenger About the on and US of XX% week, is the As flights. airfreight

and XX is in heard we as Europe as close last of out demand However, the softening businesses as well factories hours.

levers, the deployment. We have virtual pricing to monitor a Center and Command and all capacity manage up in time including demand set real

We will as increase our our for or the shareholders. decrease deliver returns can so service required provide we and capacity best for our customers

Now turning to TNT.

deliver on enable QX, make our world network. TNT to the fiscal We on This continue to the continue year. related to to cost complete will will are the of and to track serve ground milestones as progress FedEx operations important interoperability we around In as end be significant the intra-European integration lower we us the optimized.

for integration on of We the of which integration in bring network close TNT track physical air completion FedEx. also into will network XXXX, fall to remain a the fully

behind stated As TNT the sound. rationale the remains I have before, acquisition

That Express seeing will US. we rollout positive select with we the the in month delivery Ground already earlier quarter Greensboro, results. Carolina Express FedEx in packages residential contracting FedEx North of for announced began this day-definite are and and the transport Earlier in be

roll rapidly over we to which In ongoing is optimization April, Cincinnati, market. our mile one optimization Minneapolis, Paul, St. we'll changing meet last the the of Lake of to business out last initiative, City, months. continue we mile the to XX will challenges This comprehensive Newark, transformation next Salt a of as and into Phoenix, refer expand element this

right handling cost This the the evolution first at in reduce the previous right is in serve to right our the On cost. the our step delivery, calls, transformation efficient model e-commerce we've network product residential ways safe, business Ground to more including of cost, dynamic large by moving Ground's the serve the deliver volume new, market, network in SmartPost finding and packages. discussed to weekend to

virtually This and new in dynamic network allow our to efficiency, investments cost volume profitable grow. of time package down to the us and at competitive routing more even us about any optimal serve any that network. the make be Ground increase FedEx These changes within enabled to will are our to drive will being by decisions more as residential continues technology allow

increase they maximize but are the improve capacity in at and delivery network They investments changes and productivity, Our will significant, density, optimize technological are FedEx Ground utilization. operational necessary. Ground the

of investing are e-commerce we as distribution capacity, smaller we growth investment to also capacity push the sortation of Ground omnichannel facilities closer in in regional destination speaking And the address. given

to Ground most All e-commerce shape of the what into combined FedEx market. company transportation these the will serving be cost-effective

finish, I sure the in I challenging Before Freight FedEx about despite be talk the to a at economic environment. want to third results exceptional quarter

Our of making volume quality FedEx continue Freight to on adds focus the and team value execution. toward progress to laser the They portfolio maintain a at goal, margin operating revenue, great they FedEx in are and overall double-digit soft even environment. a

committed to long-term delivering In growth. summary, FedEx continues profitable to be

communities the weathered successfully near the before, coronavirus our crisis have global we focused supporting customers term work in situation. We on are through employees, and we and as

the our core completing improving transforming Ground including continue TNT the be We and our network. profitability by rightsizing operational excited our by ahead integration air prospects company, on about execute international excellence priorities, driving we to as

optimistic cost optimization We evolve the step. results business our our the produce with measures a should the environment, for to efforts reduce our With stable first model strong about economic these being Corporation. last serve to to are mile more

Alan? to it our over Graf provide on financials. I to Alan will Now turn details

afternoon, Thank Raj, everyone. and you very good much,

to quarter global variable higher pricing pandemic, of comparison, operating more of a service impact due declined coronavirus accruals, unfavorable number compensation results conditions, the business, FedEx offerings, expanded mix competitive an environment. the Amazon weak third including including and of to loss services continuing a Ground Our a factors, increased from the costs the self-insurance lower-yielding shift economic

The weakness. outbreak the revenues economic coronavirus, somewhat the pandemic December and the volumes to global expectations. were underperforming Prior of coronavirus our magnified commercial

fourth Amazon negative of A The expansion Higher third reversal expected a a accrual the be of compensation by combination approximately XXX points. loss Ground approximately of and by Ground the margins of benefit in modest negatively volume self-insurance compensation of year The comparison quarter our million. headwinds corporate annual incentive margins comparisons impact variable impact six points. year-over-year in the accruals drove the $XXX XXX and to approximately of last quarter. the to basis negatively basis delivery seven-day is

week cost an partially revenue growth FedEx additional FedEx by in These hundredweight which delivery at volume drive helped factors at XX% $XXX operating intercompany allocated into year-to-date FedEx charges. activities, December third Cyber and which best operating income day, their benefit through lowered residential Freight from per quarter segments ever, the benefits of of offset transportation million has the approximately shifting our were an our Week Ground, expenses to containment increase Services

primarily tax lower to included effective year, to XX.X% last tax the increased quarter recognition income which third offset rate benefit Our of Netherlands. XX% carry-forwards, by versus a expense certain the partially loss tax was net last the tax attributable rate of a year's because in in enactment

caused earnings and XXXX to our consolidated fiscal pandemic. our suspending are coronavirus due forecast We great segment the uncertainty for results the by

strategy adjust and to market long how long-term our remain cannot do in the last, ability currently economic our predict the conditions. we of we While pandemic confident will impact to

reducing Express flight fourth at hours the continue conditions manage will FedEx capacity We further. international economic global by quarter network in if deteriorate to

the pandemic, network have global if the air the demand increases However, meet world from freight to the to needs customers. as our COVID-XX of flex we ability recovers

We expect quarter. growth FedEx continued during revenue the Ground at fourth

deliver our growth, our including cost certain by integrating and attacking having Express in and results delivery higher to efficient position residential will costs FedEx oldest and conditions FedEx delivery future costs TNT we earnings expansion operating negatively packages. impact To SmartPost further and FedEx to headwinds quarter. However, the throughout in we and are enterprise year-round continuing residential near-term Ground seven-day weak for FedEx Ground mitigate least the economic aircraft, lowering expect retire the us fourth

these also for gains of the Ground and rebound expansion, 'XX lapping In TNT our from coronavirus as FedEx cost increased actions, addition the to weekday, business, performance services, benefit a Amazon loss subsides. from should pandemic the lapping demand market share the FY seven-day profitable the additional the operating one in of of synergies integration, our delivery cost

finish 'XX We with approximately spending of FY billion. expect capital to $X.X

detail spending uncertainty business FY reviewing planned are conditions, 'XX. the for great and in our we Given

Our capital are and lower to intensity as beyond. FY is 'XX aircraft after committed 'XX substantially in FY decline expected deliveries

congratulate with To FedEx organization finish of relations qualified investor invaluable my part to named being been the our Lenz and of Mike my successor. remarks, treasury, an teams. I Mike uniquely his want financial for our strategic finance is success. to has finance to guide improve leadership He Company

Now to outlook. the

there to related in Raj well that much performing on been as have uncertainty discussed, performance. question any to so today, we nor near-term we give Although up cannot guidance financial is comment March

begin the operator session. question-and-answer can And now the

first hear of today Bank with Ken [Operator Instructions] from We'll Hoexter America.

made if Raj most leave you I Alan. you scale guess general here? a or for give what decline? in worries don't it the the of Is you Thanks. what rate on parameters I forward the demand offsetting look the and it. your - I'll Is cancel scale as this increase decline into air Maybe outlook, it rates of of demand But not some you know kind Maybe canceled the the the some is insight just in question. recession? can give outlook. it on just that

Raj. is this Ken,

we what not demand the we delivery home and even and think pandemic Asia. have the especially seen, how seen said is have now earlier, We've and - been happens volumes demand what as from I of last for think quite an this strong US demand. to commercial Ground you in we do stable. know FedEx the And couple increased - I if weeks, here evolves

there. demand do to going how come a is their as of here Europe down know not lot we to instance, through For shut is starting manufacturing

to Alan first there of few a good. hold no us. many March And But been is us weeks next at so forward the this what two said, as weeks way for the have unknowns project are there So for point.

as a a probably something completely. think, if heard Ken, else out I lot it's if U-shape, a you V-shape of it's people from it's it's thing, one there,

managing tell We are you every We to what's really week. certainly happen to going had XX this on have But the next new well. day-to-day in business basis. a hours Europe been doing think we almost know something happens. I

it is a shut probably more you would UK demand you can't be little and have do was great to continue. ago. starting this to shape is best side going than in I less tell down there. you are Europe we just told plans this have days a the way about it I seems it know we bubble either is to thing, going Asia is tell is the that's can now because that that Now go We to and three so out the same or the bit from cost and uncertain right

to move Ross next with We'll David Stifel.

question SmartPost bringing the of Ground. to a on Just in-house transition

or everything once speeding now, away postal the Given up? are it's to that's going product? slowing it migration service the all you Ground segment, what And SmartPost the within on from happens then the

technology. I SmartPost it Route second with all it and density. Matching FedEx course an David, of Dynamic One are economic efficiencies a into productivity Optimization, And us. enhanced planning. purely our With then moving we previously adjacency stop And and That's drives we route reasons. is significant for as in of maximizes is opportunities our few discussed stops reason Ground was. continuing decision. was a this it we're doing process have think is the the

there and to continue are of we we've So forward calendar keep that for pace we year. and halfway moving at are the continuing roughly rest we'll together the put and

In that question. I'll Brie terms of the answer have product,

great a Yes, it's question.

distinct products. we We to two believe that continue need

have rebranded well product be product. as We is the as currently what in the SmartPost will home will future. It our delivery

that sense. the because also will do we give separate as we post need this there believe think that transit into for and really will flex slower products We portfolio. two will to with volume as makes we we that the can product that office two grow are economy transit required But sub-pound distinct flex peak. markets We you we

from we'll Brian hear And Ossenbeck. from JPMorgan next

the some if before, a Can else TNT, else the Alan, - out Ground it's detail commit things more you. you uncertain to you ask It is wanted to retiring and a doing given been Express. bit what at this But could the just rather the on radar give there's pulled of fleet, parts the lot sounds if of on has we've like cost doing anything doing outlook little you there? moving point? initiatives. realizing heard you're Thank could - I

to I densities, last grow look I we of Well, That's that of that thing clip as be that want out do not are question, buckets. greatly the is flat intercontinental and what's at now to a and to rapid just think a costs at big continue That's part we to Brian, need the we and hours Express. also where to QX emphasize, grow going lowering two - same continue strategically. the those forward. we Ground air comment. we right as look going to Those right-size giant network are a benefit Ground as we've amount taken The at with big its the

good go But take good, a in can I that managing know we this from we really technology and continue as scenarios, is costs if where what of confident and think we successful I taking lot reduced everywhere doing I've that outcome efficiencies. we and as and additional and that day-to-day else a to some our right as of that I'm have point. this. know we - so we're we anybody said, as we'll this through be steps is short that be week-to-week look projecting of not now We've a we to And And number bad just at will go. we with out frozen overhead. grow, - productivity, will don't

next Wadewitz. to Tom move UBS's We'll

are could ask Ground. to the delivered BXC going see, to over CFO. covered always you work congratulations, years. Maybe long Congratulations you've time to announced it thoughts to you It's it if takes might of let's offer the wondered the retirement. in the a reengineering as on Mike that. great on been you Express want and It wanted pickup I been some could how Alan, your have that we I if be for Company on shipments with say savings. And require routes the - well. how could delivery to savings? roll the frame you kind cost long magnitude be Express on you. do large, of time it to Thank And to out. also it cost seems about offer and but thoughts realize in The the I of some think

Tom, this Raj. is

started So fully as yes, we said way. this in under I process March, have before, and is the rollout

in We the be by the will will be April. and the months the talked rest already that XX in next country of I markets about in

to So the it's for the and we a optimization, fast-moving program the specifically market as there's opportunity - as on mile grown BXC an residential last it's - rationalize side.

what be and going quantification don't this there about comes regard. more also reason, you to point is able not come of to this we're tell talk next I the to in At a And benefits lot want for the to here. good

appreciate Tom, it. is you great to kind are, job. doing be There thank going I for Mike a those remarks. -

You in are that with are Express long good all that are going require grow is going and to things. to him. delivering of aviation and time-sensitive. couple going A hands distance be items it's

we Express we're didn't have couldn't do the of it. do they been manage can at to a time. have delivery evolution we technology will we that pieces years the Ground make of the ago couple in the time, that moving same That's slower because because just a managing So, that the normal to flow

ramp Now Raj on things the we through to have says, it. halfway investments, well. our that. we've to horizon And as we're about the up continue technology as we as other got do And technology

of we think of which the hopefully lot moving a be, and to what to we're is networks is going again market transforming we'll where have operating how more growth international there to. future is program that's we're Corporation So the complete FedEx e-commerce, a

From we'll from Goldman hear Sachs, Alliger. Jordan

order home. pretty had continue on, in growth as strong pretty from all quarter that's with will solid Ground be to and you people it obviously in Question, the maybe going

You - mentioned delivery, of sort for you sort in few a and magnitude out, they Realizing diminishment maybe costs pretty for forward to load the the also notably as we that move do the sticky seven-day of still guess or headwinds, Amazon, the a next there. of roll the quarter the six I in there's ahead growth. near expect mean, the do term? into stay headwinds self-insurance I

to There's upon diminish. a we the expect I things lot that from of Ground strategic piled a headwinds No. standpoint.

later On Sunday. going said, We been to you Amazon strategic get wait are PLPD, very till understand. no, We traffic strict frustrating. out We for as took it's let's it our going. the reasons,

and Ground, in do companies. accidents every we we severity and day working to see every of our use safety one improve rapidly and our video We're of cameras particular, recorders, At in we are frequency the our the expanding significantly. that where of decline

think the behind can things. litigious we as better And society. will in We're I QX. But we handle well. this we I another have And charge the to that behind we us. today's severity us a learning both Hopefully much backlog these of old had claims that's to take frequency and that and a significant and bit, we how has continued manage to that in how improve hope put harness

is months. be I'm in at committed structure particularly I the about to Ground, and very to know And excited XX going so. producer, we to what cost to next the our do get low-cost we to XX are have

that, Jordan, customer add that to demand if very I is strong. can the And is

we seeing small, base that diversified and medium and and the good. player that. now are in e-commerce we States, very, United leverage leading off And value large from the about can earlier, now market demand talked Brie we very the in very the we proposition is customer are As have a of

Group Scott Wolfe Research. with to on move We'll

clarify, broadly flow. then you And guys balance market the next on doing in What's support level you concerns few sheet? the of just for separately, lots CapEx generally Maybe flexibility So balance are Alan, cash year? the what to about of Thanks. that's the sheets, still this fuel did Express, talked I any to X% think and of you just about the take environment? the can out questions. in on you capacity way know last a quarter about

Yes. A little more one. than

obviously me I AXA We're is scenario let that flow, to big support. to got some mean, part the kinds planning That's one. have for. all mean, hit of the of looking government right. I for you've cash what everybody request, about got the liquidity our them via group So we've liquidity. submitted

a as can going to. we out much we don't definitely need that. have scenario of as We I where we're hit cut 'XX doomsday to think CapEx

I can't tell our going be strong, flows that coronavirus. to through get but we cash the think are you I until

going that's And nobody when to knows be.

now. So we are right out it of managing the heck

our just We revolver. we increased have - a

We have new many, we could to many, if that beautiful for liquidity. aircraft we many unencumbered use needed

think passenger my I in the we business, regard. to So, are good that shape friends really in compared in as

As benefit. fuel, if a the surcharges stays use it the that should in of business. down have fuel one our of managing surcharge it we But is to just somewhat here,

goes. to today, see had say, think we're X% because I how just but we'll So would that flying that X% out of pretty you had to, than we're We I QX. range. Asia close we flat there in expected to more reduction committed in to we're not

Wells Fargo. Moving next to Allison Poliniak with

incremental there? mentioned to the next add increased capacity How quickly weeks? the capacity you or for think I number speed talking going were you evolve Asia had the of are you're to your need about and chain. few there supply Any of - industrials you on increasing supply over the back comments can in I there. demand to know Just manufacturing. A comments talking maybe

up the the In value as down down needed. able our be we we planned case, schedule particular of FedEx to this flight And or flight as that's Yes, about flex to are our is hours earlier, talked X.X%. network.

capacity in deploying move like business opportunity constrained as tactically excess environment. profitable However, we additional sections we see the this are to

again, in this becomes and player now. the connecting evident fact that's of this circumstances, a key are out ever global in So, we more commerce, China current especially right

Suisse, Allison Credit From we'll hear from Landry.

fiscal the just in historical about to you prospects a for at in Express considering relative should and you. years So, specifically, global how downturn, PIP the half protection in downside done or in we Thank you've the maybe or frame severe could the result you've decrementals? second the what recent US during margins made And could relative changes some to of even a XXXX? structural decremental business recession think that more the

from few to of you're I rebounded at well. managed about our always of FedEx down we've have scenarios, realm of it. likelihood of them have the think and still like four been talking career one in my it's as I've on way we but through Obviously, well year a always today, these very and possibility very and

So that would normal it it's imagine would be. all you the levers

and view, rebound best keep But, from that chains as that's global from in to to this we virus point supply it, think fight a in we're I regard. my shape probably of as great up then continue positioned company

be to run to to their people businesses needing on chains, we're with us them they're confident can eat; that and are demand. rely to run that. going help long in people it So are are going supplies; going there be is there lasts just But medical going to businesses, going demand to is. and depends on People how supply it be how much and to needing

Barclays. We'll move with Oglenski next to Brandon

the guess rationale I to in behind SmartPost ask just bringing house. So I wanted strategic

drive by You're time, the to product analytical with revenue issue? an purely density isn't that perspective, now stops. $X network. the served the trying simplifying from same being base But obviously this effectively potentially to at Or is $X overly a residential diluting the delivery

talk Well, in we time for SmartPost. of the and match part. the I've Brie talked it Ground dilution the our part, match postage to network, below Every turn about our to have a near about costs significantly the I'll or a SmartPost cost package are over

it's our math. with else out then there, that of can we just providers get more be those more they're delivering. independent everything productive So And the service the

the the So well. a the talk the Brie let it's package I'll effect across extremely per network. entire has cost And working productivity about marketing and wonderful it on part.

Sure.

As I but they are from is different mentioned a before, there couple of service perspective, a important. features or nuances

from The it SmartPost home product is guaranteed delivery a is The first not product. a a perspective, product. guaranteed

as earlier, I two you there. of of of analysis lot for this a lot studied distinct mentioned we have it. our need in-depth and peace So if to rigor And continue that - markets pay you're a with mind we going

the sub-pound, that the economy to is product. product, the We've do a that, options continue are of We of delivered They're them product. studied And In features and not perspective. delivery that we confident have Home from Home the on think consumer as We office. available post service the will portion very call Delivery I mentioned addition product. that of a service be variety this we different Delivery by we're There to on earlier, consumer believe this. the right available a are decision. different of on portfolio, features in the

Stephens. with on Jack to Atkins Moving

you think It BXB you're business And your weeks, among the BXB customers? traffic strong few about the to to we last terms sounds Can over last particular there over in about weeks. the out that But has and mid-sized change to leverage the customers given your how do happening core trend what you seeing of trends a of impact? like you going three with weeks? BXC been Have seen certainly businesses, you are think small virus those base? over as look next what's couple as talk core two

great Yes, it's question. a

our about talk me it world. vary because BXB Let the does around base

United month vast coming have the improvements really vast have we throughout we the in commercial the from of March from volume, see replenishment as we date, of we're a an From perspective, currently optimistic. a business, Asia, stable. a day-over-day, actually that From traffic. stock of majority perspective, week-over-week it is out Asia to Here quite mentioned, Raj actually States, seen the and majority is quite commercial what

seen the XX% to some XX% to we back to have work Closer to capacity. What actually at back XX% are work is in XX% of this in Mainland now when about of we China recovery, large in morning from China perspective. manufacturing to small coming what are looked Chinese a we manufacturers businesses talked

and rebound. output around believe that in are we to seeing So XX% is we XX%

an from small perspective. back really So China Asia customer leading, from a perspective, we large feel customer good, coming

say Europe, it has most can't in I predict hours. change, last the XX right we had the because XX to would now

the the seen the manufacturing to incremental end of all week media. anticipate by be do You've We closures in Europe.

more in strong is good there So softness we as really are shape and US the speak Europe, Asia but we today. is anticipating in

Cowen Becker. hear from from next And Helane we'll

an Fred. but retirement. congratulations the will you world for at about and change XXXX coronavirus very if Thank you There believe in an and with the lot very Thanks the It's does affected wars trade in the sad I era how all? me. change best you this business, just question way of you world of think that can't and it, you. guys end operator. so talk was My on. wishes Could whole on much, Alan is for your really a for

here, think Well, era. Helane, it. Alan talk just it started his at till is got tried an he him, he's indeed with lot an of couple to end I were on of XXst more priorities and next getting told But but I I a have out then CFO of I'll about September to still his the the right And have is family. Susan the we Alan calls. midnight. say

particular coronavirus. I So, people gotten think been the been disappointment to that things to world bit that a before me of we was of the and one in haven't midst Helane, we've how changed SMC of the in fundamentally the it's across the a and

President analyst a business war essentially people because in said fact, was basically hit bullet mean Germany. people that on of just it recession point it of it that into wasn't the good began in it trade famously was said the wars was these Europe and in first Europe. we ricochet the in And I when XXXX XXXX, one is the were that of missed sights, trade are the was moving calls win, we the that easy March to when a fall China

began they look until forward, a And ski like at they to and last of slope the if from So that by couple XXXX, that. the out. the look fall you PMIs XXXX then flattened of see point we really months of

a of to It were trying that We the wonderful in the it was job, think, in I done was China of we that the to didn't going spring with fact deal were and a happen. that. we've on be deal hopeful side So told case. trade XXXX

have a some would We more been not things then probably bit optimistic done we back. different

and that's and it had on, about in of non-tariff reduction long tariff protectionism change for the and been world FedEx a fundamentally trade the rising So and barriers. major gone of and time, is lot a mercantilism the talking

the growth And you world to So our year we've be going I of coronavirus outlook. that extremely suspended had GDP economic is this on know top small. and

around, that less moment the catalyst at see Maybe is think there nothing says to political I number international is, but to of one that's trade So be a those - probably because turn that. you're will seems trends. going that it

a didn't. lot forget than change long was somewhat Second, because would XXXX think thought there term I this suspect things of of result I as tremendous will a a that more people in people be short epidemic that. term permanently was flu and that They it

terms doesn't Now underlying for to stark. bit the is the to older because in dangerous people it's seem little It a different coronavirus, diseases so contagion. lethality most the maybe people, virulent quite but obviously with of be as

and So lot travel. minimize have term speculate conferencing a what's prudent lot going the and on least in to video a near sat business and the having steps use now you're if and all to of had more forth, it the be ATA very I at would of to so that's AXA boards

going to that's be think I one. big think, a I

day, and towels announced the in into restrict a and am market, already correct major we monolithic don't X lot are of sort inventory, as Tier leaned it we've set third, the products. we've going think in midst of are that revolution and that Tier people to heavily I X I focused use that's consumables X. and market are one then Tier fiscal one I today every e-commerce that or thing And stop. just believe non-essential and particularly X this of think not were Tier to paper there is we the as Amazon year. said, going I they as things of this went the misunderstand recently very And the on the and into e-commerce retailers we

customers moving So you Tier very and to X. see retailers our be competitors big the into this big effective

We idea. are good basic And we be market didn't it we we felt to point, and X did this think because the Raj are because confident math e-commerce, We the said the a it producer. was again insource can and we get to and that there. low-cost Tier we SmartPost low-cost Alan's very should the with producer short-haul leader we

it, coronavirus on the think and that first we but it. into of said, don't And have leaned challenge I year now you environment top this of know change. at painfully in it, the be the said - a so that and we've year fact we corona as would of And it we

So I those things to three change. think going are are the

trade. and growth continue I think be GDP I business global in international you travel, business maybe third, the slower be think then very all number changes big of have think certainly to significant but e-commerce will and disciplined. have We Probably two, travel. we a will market And we travel, there, take we share And revolution but that. part some plan to can

Wetherbee. Citi's Chris next Moving

of difficult might come back in better of Ground of and to I little of at try sort that circumstances kind up. what back move a in ability has guidance But seem understand to just understand of so to to the far there margins been a moment would that it's be. the provide we're now. cadence progression to a margin maybe very the given it Want stagnation we pre-virus, the bit for like we've improvement the think seen

this get You EBIT of closer kind significant points despite revenue of called was out growth. XXX an flattish perspective basis from specific to impacts

time just just right might just drives the line get that those margins maybe moving it's SmartPost, to how to incremental top matter that trajectory like? build margins. it's better is But if sense back could needs of density a before give maybe look start So What a now? to happen you robust given of us what

Well, the you do get made have to and than tell really I it move out to we can Chris. far, I as I you can't and about how know I with got strategic I tell that, out said, QX. better Sunday to because there there it. give we so any Saturday don't

big will we next that a I and fiscal think off that year. pay in lap way to start

halfway optimizations scheduling. route are implementations our technology our through our on of and We

time did our driving so pricing get densities down X the per would with Every things profitable. one Tier as be get We that some is the business. of out package. zone growing closed anticipating those We're more down cost there grow the we those we cost would over of

as so, of of strategy. that's it part the And part yes,

as an know the about job the has I doing are to said both the we're costs I to that it closer the origin But up. doing know that. where I talked what destination. with on mean, great a traffic of it putting where has the heading. way or I customers sides before, we're where We get regional equation a sort We're facilities

overall and get that and through on BXB so traffic well. come, Ground. don't we'll we many on yields more So to way we're managing under things we But We're because as, on not that the having we're total are pace there a again, as completely back have thought would the standpoint transforming we have.

is positive the thing here space. we Alan. in together, one two the And the factors when e-commerce in news taking think good Ground. outcome into share, just and are especially are, The it they to service, are customers And you I put for add, a taking results

next move Ben We'll with Hartford to Baird.

load to freight how Asia? air of you out, on this to in-equilibrium long How load play demand likely most on factors congrats that think out just in to the US Raj, How do supply given you further and but come, do BXB will specifically to Europe. these and Europe high with be? it's think Alan, persist your factors and And to perspective retirement. some presumptive business headwinds long see we be this way you kind riding right at factor how as very describe should of in it the that we're robust more belly some capacity respond online come risk back with we of Until with the some economically some see space of Any markets? the and developed the experiencing to very, long now, moment? Asia in perhaps more start load market freighter

through and to the is go the I'm to Asia very look which is capacity you quite other intra-Asia And the out record, back we down. how not went The seeing - we at also just a the to Asia is airfreight interesting if - US. is for best load manufacturing demand online, now is are answer of of factor Europe robust. Asia through. coming to capacity than And and sure of question right what kind

the So net-net, we we seeing demand, and go that are should see forward.

That XX that far And to thing severely very going that's We're can dealing As though of I with old. project to One went literally the concerned, trying is that that constrained. you. is belly hours impossible. is Europe is much And early I tell. out capacity as information very, know tell traffic the comes to capacity. XX% on capacity that down, transatlantic as be

wait As right and for too me as anything we see, about to the it's that and say far to now. early demand, have

from now Majors Bascome Susquehanna. with hear We'll

mile your along change where that going you Could thoughts SmartPost the favorably in that Have already partners integration? you us got are the contracts in delivery you update economics on how the are as areas seen place? and structure build last with Any negotiating Express density you far ground you've volume Thanks. to and expected?

SmartPost delivered virtually nearly by that So, XXXX and the exceptions expect calendar of volume and by earlier. the with half be to is of we year provider ground end the of currently business about some talked Brie service complete

more providers, We're scheduling, getting. they're partners. our As profitable. We business volume efficient build love them their can. they continuous so that contractual relationship sure them They helping to them their a on make additional are independent run very basis density the they with businesses. work with great their everything them giving the make service They that can we're these with helping to

So a it's relationship. great

to to like Foster closing things turn I'd any time, over remarks. Mickey for this at And

Relations to your additional Bye. free you Thank if on conference quarter you. you FedEx. Thank anyone the earnings have Corporation's call any call. third on in team Feel FedEx for participation Investor questions

And us We joining again today. conference. that do you conclude appreciate today's does