FedEx Warns on Profits

"Less-than-truckload and the trucking business in general is in disarray," he added. "We're nowhere near the volume we had planned, and we don't think we're going to see the growth we had planned to see."

Added Dave Duncan, CEO of FedEx Freight: "We got caught re-engineering a network during a down economy." During the quarter, the division's operating income fell 30% to $105 million, although revenue was $1.23 billion, up 22%.

Graf said the current $3.5 billion capital spending forecast for this year is unlikely to be met.

"We're going to back way off on freight," he said. But aggressive international investment will continue. "That's the best value-adding proposition we have," Graf said, noting that a Manchester, U.K. to Memphis flight, added in August, has been unusually successful.

Meanwhile, FedEx Express had revenue of $5.89 billion, up 4%. Operating income rose 9% to $519 million, a result of international revenue growth. At FedEx ground, revenue climbed 14% to $1.62 billion. Operating income rose 19% to $190 million, as package volume improved by 10% and yield advanced 4%.