On the bright side for FedEx: growing e-commerce
When a giant country like China has financial problems, they ripple right through borders. For shipping companies, that can mean sending fewer goods or materials.
It can have an effect on what’s known in the industry as “general cargo”, which are “loads that are a few tons in weight,” says Satish Jindel, president of SJ Consulting Group, a research and consulting firm in the transportation logistics industry, and part of the founding team of FedEx Ground.
Luckily, notes Jindel, FedEx, which is set to report earnings today, is not known for shipping big cargo.
“They’re shipping lighter packages, that are 10, 20, 30, 40 pounds that are shipped between corporations. High value retail, high value electronics,” he says.
If China is the bad news, on the bright side is e-commerce. Sales are up; in the U.S. this quarter, 14 percent over last year.
Says John Callan, managing director of Ursa Major associates, a consultant to the parcel postage logistics space, “E-commerce is growing like mad. There’s no stopping it.”
In addition, notes Callan, FedEx has tried to balance problems in Asia by strengthening its position in Europe. Making a deal to buy a major rival: TNT a Dutch shipping company. “And of course that gives them more access to the China market from Europe,” he says.
Another positive for fedex: the price of gas for planes has fallen, says Jindel, almost 10 percent from last year.
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