E 2 Main Factors That May Spell Serious Trouble For FedEx

2. Trade war uncertainties and global economic slowdown, also the loss οf a contract with Amazon lead to cost-cutting measures

“Our performance continues to be negatively impacted by a weakening global macro environment driven by increasing trade tensions and policy uncertainty,” said Frederick W. Smith, FedEx Corp. chairman, and chief executive officer. The company is pessimistic about its future financial performance due to a mix of global economic turbulence, mainly the trade tensions between U.S. and China adding the fact that in August 2019 a partnership with Amazon.com, Inc. (NASDAQ:AMZN) ended. A long-term cooperation between FedEx and Amazon over the years turned to competition between them. “We basically compete in an ecosphere that’s got five entities in it. There’s UPS, there’s DHL, there’s the U.S. Postal Service, and now increasingly, there’s Amazon. That’s who we wake up every day trying to think about how we compete against and give the best services to our sales force.’ said FedEx CEO Fred Smith.

The Organisation for Economic Co-operation and Development (OECD) in its latest global economic outlook issued a warning for lower economic growth in the future. Some of the key points are:

• “The global outlook has become increasingly fragile and uncertain. Global growth is projected to slow to 2.9% in 2019 and 3% in 2020. These would be the weakest annual growth rates since the financial crisis, with downside risks continuing to mount.”

• “Escalating trade policy tensions are taking an increasing toll on confidence and investment, adding to policy uncertainty, weighing on risk sentiment in financial markets, and endangering future growth prospects.”

• “Growth has been revised down in almost all G20 economies in 2019 and 2020, particularly those most exposed to the decline in global trade and investment that has set in this year.”

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Comments

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Adam Reynolds 7 months ago Member's comment

Since you don't disclosure positions - safe to assume you are a troll or hiding short bias?

Stavros Georgiadis 7 months ago Author's comment

Hi I did not disclosure positions as I do not have any positions for this stock.

Craig Richards 7 months ago Member's comment

If #Amazon wanted to kill #UPS and #Fedex, they could.

Beating Buffett 7 months ago Member's comment

The question is, would they ever want to? Launching their own shipping division seems to be more a way of saving money than diversifying. So both companies are likely safe from competition. But the lost revenue will definitely hurt them. They made billions from Amazon. $AMZN $UPS $FDX

Stavros Georgiadis 7 months ago Author's comment

Yes losing revenue is always not a good thing.Well said.

Stavros Georgiadis 7 months ago Author's comment

It is a very interesting point, thank you.