fedex CEO Raj Subramaniam reflected on the shipping company’s quarter in an interview with CNBC’s Jim Cramer on Thursday, highlighting the strength of its intercompany transactions.
“FedEx is at the heart of the industrial economy, and that’s the global network we have in place,” Subramaniam said. “We are always focused on differentiating ourselves and providing new value to our customers.”
“So we’re winning in important areas,” he continued, “whether it’s health care, aerospace, defense, and now with new data centers and investments in AI.”
FedEx released its quarterly report after the close of trading on Thursday, with higher sales and bottom line results. Management also raised the lower end of its full-year forecasts for both earnings and sales. Shares rose more than 2% in extended trading.
Subramaniam explained that FedEx is benefiting from the data center boom, noting that the company’s customers, which have invested billions of dollars in artificial intelligence technology, need to move parts domestically and across borders. FedEx’s global network is well-positioned to support large companies, he suggested. He said 66% of FedEx’s revenue comes from this division, suggesting that the business-to-business division is growing.
International supply chains and trade patterns are changing, Subramaniam suggested, saying the world is in transition “from one equilibrium that has lasted for about 30 years to another.” He said FedEx has “reduced capacity” as U.S.-China trade has declined over the past six months.
But he suggested business was recovering in other areas.
“China’s trade surplus is actually increasing, meaning more traffic is going to other parts of the world,” Subramaniam said. “So intra-Asia traffic is up, traffic from Asia to Europe (although it’s actually mostly B2B) is also up. Latin America inbound is also up, traffic from Asia to the Middle East and India is up, and outbound from India is also up.”
