FedEx Corporation (NYSE: FDX) may be delivering to its customers on time, but its shareholders are another story. The package delivery company warned that its fourth quarter earnings would be hit by higher fuel costs and a slower economy. This is the third time in 12 months that the company has lowered its guidance, which has many investors on edge that things may get even worse before they get any better. In fact, Fedex noted that it doesn't expect things to get any better until after 2009.

FedEx is also widely considered to be an indicator of the larger economy, so any slowdown in this company could mean more pain in the broader economy as well. Chief executive Fred Smith continues to point to fuel as the big wild card as it climbed 42% in the fourth quarter. The company was able to mitigate some of the costs by charging customers an additional surcharge, but this obviously caused a slowdown in the volume of business that it conducted.

FedEx said that it planned to counteract the decline through reductions in its capital spending. The company plans to intensify its cost-cutting efforts while focusing on long-term measures like its aircraft replacement program and the expansion of its new Chinese domestic delivery service. In the end, it looks like the majority of the company's income in the near future will be derived from its business activities abroad. Meanwhile, the U.S. economy may take awhile to recover from slowed consumer spending and higher fuel costs.

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