Tight job market is causing costs to rise at FedEx

Business

A FedEx driver delivers a cart of packages, Thursday, May 6, 2021, in New York. FedEx is getting hurt by the tight job market. The package delivery company said Tuesday, Sept. 21 that its costs are up $450 million in the most recent quarter, as it paid higher wages as it got harder to find new workers and demand for shipping increased. (AP Photo/Mark Lennihan)

NEW YORK (AP) — FedEx is getting hurt by the tight job market.

The package delivery company said Tuesday that its costs are up $450 million in the most recent quarter, as it paid higher wages as it got harder to find new workers and demand for shipping increased. FedEx also cut its outlook for the year, saying earnings will be lower than it previously expected, partly due to the increased costs related to the tight labor market.

Shares of FedEx Corp. fell 4% in after-hours trading.

Competition for hourly workers has become fierce, and many companies are offering higher pay, sign-on bonuses and other incentives. It may get worse during the holidays as companies seek help getting gifts and online orders to shoppers. Online shopping giant Amazon is looking to hire 125,000 people; delivery company UPS is seeking 100,000; and FedEx wans to hire 90,000.

Overall, FedEx said its fiscal first-quarter expenses rose 16% to $20.6 billion. Its profit fell 11% to $1.11 billion in the three months ended Aug. 31.

On a per-share basis, the Memphis, Tennessee-based company said adjusted earnings came to $4.37 per share, missing Wall Street expectations by 59 cents, according to Zacks Investment Research.

Revenue rose 14% to $22 billion in the period, beating expectations.

FedEx expects full-year earnings in the range of $19.75 to $21 per share, down from its previous forecast of $20.50 to $21.50 per share.

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