The global shipping giant FedEx Corp (FDX) has been the leader of its industry for decades. From its humble beginnings in 1973, the Memphis-based company has grown to become one of the largest logistics providers in the world. This success is largely owed to its focus on innovation, commitment to customer service, and excellent financial operations.
Recently, there has been cause for concern regarding the long-term outlook for the company. Investors are wondering if the company’s growth trajectory is on shaky ground given the current global conditions. In particular, the trade war between the US and China, which accounts for a significant portion of FedEx’s international business, has clouded the visibility of the company’s future earnings.
So, is FedEx’s long-term uptrend in jeopardy? Let’s take a closer look at what the company is facing and how it might affect its longterm performance.
The first thing that stands out is the impact of the trade war. The tariffs imposed by President Trump have had a direct benefit to FDX, as the shipping volumes for Chinese imports have declined. This has been beneficial to the company’s bottom line. However, the company’s current advantage could become a disadvantage if the tariffs continue to grow and become permanent.
In addition, FedEx is facing an industry-wide squeeze from internet retailing, which has reduced the need for traditional shipping and delivery. Amazon and other e-commerce companies have increasingly cut into FedEx’s market share. Additionally, FedEx is experiencing increased competition from other delivery service companies such as DHL and UPS, both of which have been aggressively building out their global delivery capabilities.
The final issue that needs to be examined is the cost of labor. The company’s largest shipping hubs in California and New Jersey are both heavily unionized, and these employees are increasingly demanding higher wages. In addition, fuel costs have been on the rise, putting further pressure on the company’s bottom line.
Looking forward, it’s important to remember that FedEx has always been able to overcome such challenges in the past. The company’s bottom line remains strong, and its focus on customer service is still unmatched. With that said, investors should pay close attention to the trade war between the US and China, the effects of internet retailing, and the cost of labor. These three factors will ultimately determine the fate of the company’s long-term outlook.