SC247    Topics     Technology    Security    Deloitte

FedEx’s TNT Unit Suffering from June Cyberattack

FedEx Corp.’s TNT unit is still trudging through some transactions by hand and information systems may never fully recover from a June Petya cyberattack that is expected to deal a blow to earnings.

Bloomberg reports that FedEx shares fell the most in two months after the courier said customers are still experiencing widespread service and invoicing delays.

While TNT facilities are functioning, they have been forced to rely on manual processes for a significant portion of operations, FedEx said in a statement.

Our information technology teams have been focused on the recovery of critical systems and continue to make progress in resuming full services and restoring critical systems.

We are currently focused on restoring remaining operational systems, along with finance, back-office and secondary business systems.

We cannot yet estimate how long it will take to restore the systems that were impacted, and it is reasonably possible that TNT will be unable to fully restore all of the affected systems and recover all of the critical business data that was encrypted by the virus.

Given the recent timing and magnitude of the attack, in addition to our initial focus on restoring TNT operations and customer service functions, we are still evaluating the financial impact of the attack, but it is likely that it will be material. We do not have cyber or other insurance in place that covers this attack.

Although we cannot currently quantify the amounts, we have experienced loss of revenue due to decreased volumes at TNT and incremental costs associated with the implementation of contingency plans and the remediation of affected systems.

Additional consequences and risks associated with the cyber-attack that could negatively impact our results of operations and financial condition are described in the corresponding risk factor included in the Management’s Discussion and Analysis section of our annual report on Form 10-K for fiscal year 2017, filed earlier today. In addition to financial consequences, the cyber-attack may materially impact our disclosure controls and procedures and internal control over financial reporting in future periods.

“The biggest risk to FedEx is potential loss of market share,” said Kevin Sterling, a senior analyst at Seaport Global Holdings.

“You’ve got to believe DHL and UPS are calling up customers” in Europe to lure them away from FedEx. “Customers like to track things, and they may not be able to.”

The FedEx statement underscored the fallout from the June attack, in which the perpetrators demanded $300 in cryptocurrency to unlock infected computer networks. Unlike traditional forms of ransomware, the hack appeared to focus on crippling systems rather than obtaining payments. The email address posted on users’ locked screens to receive decryption keys was swiftly shut down by the email provider.

FedEx acquired Dutch shipping company TNT Express for $4.8 billion last year to gain an extensive parcel delivery system in Europe and compete with United Parcel Service Inc. and Deutsche Post AG’s DHL.

Related Article: Identifying Cyber Vulnerabilities in Manufacturers Digital Supply Chain Networks

Article Topics

Deloitte News & Resources

Supply Chains Struggle to Access Reliable Emissions Data from Suppliers
State of the industry: MHI releases annual report at ProMat 2023
MHI and Deloitte launch 2023 Annual Industry Report survey
How Amazon Is Preparing For Fully-Electric Drone Delivery
Modex keynotes and panels focus on resilience, diversity and perseverance
Innovation: Where we’re at in materials handling
Deloitte’s 2021 Retail Industry Outlook
More Deloitte

Latest in Technology

Talking Supply Chain: Co-existing with the robots
Artificial Intelligence to Drive M&A Activity in Supply Chain
Cleo Announces New Supply Chain Management Tools for Integration Cloud Platform
Bank of America Introduces Digital Supply Chain Finance Platform
Talking Supply Chain: Is Generative AI the future of the supply chain?
Logility Acquires Generative AI Supply Chain Planning Firm Garvis
Perpetual Power Comes for AMRs
More Technology

“Deloitte” is the brand under which tens of thousands of dedicated   professionals in independent firms throughout the world collaborate to   provide audit, consulting, financial advisory, risk management and tax services to selected clients. These firms are members of Deloitte Touche Tohmatsu Limited (DTTL),  a UK private company limited by guarantee. Each member firm provides   services in a particular geographic area and is subject to the laws and   professional regulations of the particular country or countries in which   it operates.

View Deloitte company profile


Featured Downloads

Becoming a Shipper of Choice
Becoming a Shipper of Choice
C3 solutions' scheduling software streamlines the shipping process.
Thinking Differently About Supply Chain Planning
Thinking Differently About Supply Chain Planning
Political landscapes shift overnight, global trade is constantly changing, consumers demand increasingly personalized service and smaller day-to-day challenges hit without warning. If...

Rapidly Improve the Performance of Your Warehouse Logistics
Rapidly Improve the Performance of Your Warehouse Logistics
The Rapid Performance Evaluation identifies opportunities and potential improvements in every aspect of warehouse logistics operations; performance, productivity, service, quality, and systems.
Resource Management System (RMS): How to Effectively Leverage Your Assets
Resource Management System (RMS): How to Effectively Leverage Your Assets
This guide provides an in-depth analysis of the potential of various resources available in a warehouse and how they can be utilized...
Sustainable Supply Chain Insights From PITT OHIO
Sustainable Supply Chain Insights From PITT OHIO
A whitepaper on supply chain insights gleaned at the LEED-certified gold Cleveland transportation and sustainability summit.