This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.
“positive developments in quarter four however did not fully offset sluggish economic growth and customers’ preference for international economy services.”
“World air cargo traffic has shown consistent growth historically, but we have certainly seen slowing of that in the last five years. In fact, we have seen a decline in four of the last five years in overall traffic levels in the Air Cargo segment, and there are really four issues that are driving that.
One, is global GDP has been growing at a slower pace. Global trade drives air cargo and has traditionally grown faster than global GDP, but that’s not been the case recently. As I mentioned, we have seen a decline in global air cargo markets, four out of the last five years and certainly higher energy prices are having an impact on that.”
“Seven or eight years ago, the FedEx Express segment was competing in a marketplace that today is worth about $40 billion. Just the Express segment, a very high priority, door-to-door sector because of the build out of FedEx Trade Networks that Dave Bronczek mentioned to you, we are now competing in an air cargo market in its entirety that’s somewhere around $98 billion.”
“the last several years I have seen a sea change in international trade and in international transportation. And it has been caused by, number one, the increased price of fuel. I mean, we are sitting around with low growth economies and the price of brent is still north of $100 a barrel and people forget that 10, 11 years ago, it was $0.60, $0.70 per gallon versus $3 and some odd cents per gallon now. That’s had enormous effects on peoples’ thoughts about transportation alternatives, and it does make people willing to trade-off rate for speed.
Secondly, you have policy choices that have been made in China, in the United States and in Europe that have had big effects on the growth in world trade. As Mike Glenn mentioned, for the first time really in modern history, you have seen in the last couple of years worldwide GDP grow faster than worldwide trade. And, a few years ago, worldwide trade was growing 2, 2.5 times the growth of world GDP.”
“Do you think that traditional aircraft product cycles are getting shorter? It seems that the high cost of fuel is shortening usual age of a new aircraft from 30 years to around 20 years. I think that the answer to that question is, yes.”