The news: FedEx’s fiscal 2023 got off to a bleak start. The company’s profits fell 15% year-over-year (YoY) due to “global volume softness” that worsened toward the end of the quarter, causing CEO Raj Subramaniam to warn that a worldwide recession appears imminent.

Falling short: Revenues for FedEx Express, the company’s time-definite shipping service, fell $500 million short of expectations—while revenues for FedEx Ground, which handles most ecommerce deliveries, were $300 million less than expected.

• FedEx also withdrew its previous financial guidance, and now expects to generate revenues of $23.5 billion to $24 billion next quarter.
• As a result of the shortfall, Subramaniam said the company is “aggressively accelerating cost reduction efforts” which include reducing flights, canceling new projects, closing FedEx Office locations, and rolling back Sunday operations at a number of facilities.

Crying wolf? Although FedEx cited “macroeconomic weakness in Asia and service challenges in Europe” as the primary reasons for its revenue miss, it’s unclear whether these conditions have disproportionately affected FedEx or are actually symptomatic of a global downturn.

• While Subramaniam told CNBC that the company is “a reflection of everybody else’s business, especially the high-value economy in the world,” FedEx’s own business model has seemed shaky over the last few years as it struggles with contractor dissatisfaction, ballooning fulfillment costs, and increased competition from retailers’ own logistics networks.
• Nor does primary competitor UPS seem to share FedEx’s pessimism: The company recently announced plans to hire 100,000 seasonal workers ahead of the holiday season in anticipation of increased demand.