Why FedEx Is Unfazed by Amazon Logistics
While everybody is looking at Amazon, FedEx is quietly strengthening its position as an innovative and forward-looking leader in logistics technology.
When Amazon announced the start of its new delivery services for businesses, FedEx shares dropped. But FedEx has lost no confidence in its position as a shipping market leader.
Back in 1979, FedEx debuted the first centralized, online computer system, and with it became the original logistics technology leader. That innovation led to the company reaching $1 billion in sales only four years later.
Today, FedEx continues to leverage technology, for example with the introduction of hybrid-electric trucks and electric delivery vans. Added to this innovative and forward-looking spirit is the carrier’s Purple Promise employee pledge, which has created outstanding customer service.
The numbers show that FedEx’s position is still robust. The company posted strong fourth-quarter and full-year financials for FY 2018. Revenue for the quarter rose to $17.3 billion, an increase of 10.2%. Full-year sales ended at $65.5 billion, with operating margins at 7.4%.
The reality is that Amazon isn’t the only player taking advantage of technological developments and an expanding ecommerce market. More consumers buying products online means greater volume for all logistics providers. Marketing research firm eMarketer predicts that worldwide online sales will reach $4 trillion by 2020, up from $1.9 trillion in 2016. The company estimates that online sales will make up almost 15% of total retail sales by 2020.
Ahead of the game
FedEx has been scaling for this increase for years by investing in technology, with a focus on utilitarian robotic vehicles that integrate with existing systems. Inside FedEx facilities in North Carolina, robotic tuggers are being tested to autonomously pull trailers carrying items that will not fit on conveyor belts. The company is also working with Peloton Technology on linking several large delivery trucks together to reduce wind resistance, thus saving energy and, consequently, reducing fuel costs.
This emphasis on technology and innovation will keep FedEx a market leader with some significant competitive advantages. While Amazon’s getting all the press, in the background FedEx is quietly exploiting the opportunities offered by the explosive growth of ecommerce.