Do business trends from a leading package distribution company tell the story of our current and future economy?
FedEx has people on Wall Street concerned of the current and future status of our economy. Many have noticed the package distribution behemoth has slowed its delivery services, but look further to the stock and performance of the company in its latest earnings report. Since the last report, the company's stock decreased by 20%+ compared to competitors in the same sector. The last report that forecasts future earnings was not submitted by the company due to a "volatile operating environment". FedEx as a company blames the large economic climate surrounding its business for its recent downturn, suggesting that the challenges in the economy and problems stemming from COVID-19 have greatly hurt the company.
Currently the company is removing trucks and planes from service and stepping up fees for delivery. But what can we take from FedEx's withdraw from their sector as companies like Amazon, and UPS stay more constant than FedEx. An analysis of FedEx's past figures suggest that this behavior has been consistent with past economic trends. Specifically the last 3 big recessions that we have has in the United States have followed these withdrawing behavioral patterns of FedEx.
Economic analysts look to see if FedEx is really declining its business and being conservative with expenses due to Economy, or whether a shift in CEO after 50+ years of business could be a second source for change. All in All in terms of global companies, FedEx has a good lay of the land when it comes predicting the economy.
Ultimately, it's up to conversation surrounding the company whether other businesses and economists choose to use this information to their benefit.
Source:
fedex-federal-express-inflation-shipping-stocks-selloff-recession-supply-chain
It is interesting to read that a company like FedEx could be a predictor of future economic outlooks. With FedEx going to remove some of their transportation, I wonder how that is going to affect the overall shipping experience from the distribution center to the consumers?
ReplyDeleteI find it very interesting that FedEx is struggling as a company right now. In a world where deliveries are becoming more and more prevalent, you'd think that a shipping company like FedEx would be booming not struggling. After this article, it'd be interesting to see if the industry really does follow FedEx down or if this is the beginning of the end for FedEx
ReplyDeleteI find it hard to believe that the company is declining from covid as I feel they would have thrived with people staying at home ordering everything, I would feel as they would do better like ups and amazon so I have to believe they are being conservative like they have for the other recessions before and are preparing themselves for a future decrease in the economy. I remember scotts miracle grow had a huge company breakdown because they ramped up production because during covid was so much but then buying patterns changed after and they went down horribly so I look to see fed ex is preparing for purchasing changes and not over estimating the market.
ReplyDeleteI think a possibility on why Fed-Ex may be withdrawing is that while UPS and Amazon gained from the pandemic Fed-Ex may have been impacted negatively due to shipping speeds and prices being slower and higher in comparison to the competition since the pandemic made it so people couldn’t just go out to the store on a whim to purchase an item they need quickly so they would be less willing to order something that would not come as quick as they need so they would use the competition over Fed-Ex unlike before when shipping speeds weren't as much of an issue for people
DeleteThe covid-19 pandemic has caused a series of supply chain issues that are still occurring today. It is possible that this consequence of covid-19 is one of the reasons why FedEx is currently still struggling. Another difficulty for FedEx is they have consistent and strong competitors. Amazon is almost in a league of its own, but FedEx and UPS have always been considered equals. If FedEx cannot stabilize and improve their business, this could mean serious trouble for their future as a company.
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