Morningstar’s Keith Schoonmaker sat down with FedEx’s Director of IR to discuss the company and their outlook for the economy. They are still seeing decent growth and expect the modest growth to continue in 2012:
“Schoonmaker: Jeff, I think the media must have a rule that mandates the use of the phrase Economic Bellwether, whenever they are describing FedEx or its peers. It seems like there must be some sort of macro that gets hit whenever they type FedEx, it must say Economic Bellwether.
You know, FedEx has its finger on the pulse of the economy, especially with the largest or tied-for-the-largest LTL carrier now, certainly seeing what’s happening in industrial production as well, not just in small package, but trucking as well.
Can you give us the latest update on what you think is happening in the economy, and what FedEx’s noteworthy economists are thinking is happening in the economy, and what you see maybe in the next couple of years?
Smith: Well, certainly the economy is facing challenges at the moment, but we firmly believe that the economy is growing, and that it will continue to grow next year. Our current outlook for next year is to see the U.S. economy have a GDP growth in the 2% to 2.5% range*. But industrial production will grow even faster than that, closer to 4% next year, and that’s an environment that we can continue to do very well in, because its certainly industrial production that drives a lot of our shipments in our FedEx Express and FedEx Freight unit, and then the continued growth of e-commerce, that I talked about before, will continue to drive the growth of our FedEx Ground unit.
So, we base our outlook from what we see every night and day in our Package systems, the traffic that we see going through those systems, but we also base it on the tens of thousands of conversations that we’re having with customers around the globe each week, and those customers are optimistic, cautiously optimistic over the next few months and quarters, and that’s the basis of our cautiously optimistic outlook for the economy.”
Watch the full interview here.
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