FedEx Struggles to Bounce Back From Cyberattack -- Update
July 17 2017 - 4:16PM
Dow Jones News
By Imani Moise
Customers waiting for packages abroad are experiencing
significant delays as FedEx Corp. continues to reel from the
effects of a June 27 cyberattack.
The delivery giant said Monday in a securities filing that the
global cyberattack known as Petya significantly affected the
operations of its TNT Express business, which has delivery
operations in the Middle East and Africa, Asia-Pacific, Europe and
South America.
FedEx said while TNT depots, hubs and facilities are
operational, it has resorted to manual processes to facilitate a
significant portion of operations and customer service functions.
The company said it couldn't estimate when TNT services would be
fully restored.
FedEx said the cyberattack will likely have a material financial
impact on its operations and that lower volumes at TNT has already
dented revenue. FedEx doesn't have cyber insurance or any other
insurance to cover the attack.
United Parcel Service Inc. and the U.S. Postal Service didn't
immediately respond to questions on Monday about whether they hold
insurance policies to cover damage stemming from cyberattacks.
Many consumers have vented their frustrations on social media
platforms about slow delivery times. On July 9, Twitter user
@pieceofone complained about not receiving a package being
delivered from China to Portugal. The tracking information began on
June 24 with an estimated June 28 delivery date, but the user said
he had not received the package, nor any further information from
the company.
The Twitter user didn't immediately respond to interview
requests. According to shipment tracking information through TNT's
website, the package mentioned in the tweet arrived July 12. FedEx
didn't immediately respond to comment about that customer's package
delivery.
Last month's attack, which stemmed in part from an Ukrainian tax
software product, hit a number of major global companies from Merck
& Co. to PAO Rosneft. It also marks the second major
cyberattack to hit FedEx this year.
In May, a large cyberattack known as WannaCry scrambled the
company's computers. The courier said at the time it was
experiencing interference with its Windows-based systems caused by
malware. FedEx declined to say how widespread the problem was and
whether deliveries were affected.
Shares in FedEx fell 1.6% to $215.46 in afternoon trading. The
modest decline in shares is a "rational" response, Citi said in a
research note. Although fiscal year 2018 earnings per share will
likely be impacted from the cyberattack, "the longer-term story of
growth for the Express segment and EPS growth story for the entire
company remains," the report said.
FedEx stock is trading 0.5% higher than its June 28 closing
price, the date the company first warned about service disruptions
from the Petya attack.
FedEx acquired TNT Express BV last year for $4.8 billion, the
largest acquisition in FedEx's history as part of a move to
accelerate its growth abroad. The Dutch company contributed 12% to
FedEx's top line in the prior fiscal year.
--Cara Lombardo and Paul Ziobro contributed to this article.
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
July 17, 2017 16:01 ET (20:01 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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