business news in context, analysis with attitude

Good piece in the Wall Street Journalabout how Fred Smith, the founder/chairman/CEO of FedEx, "who pioneered the business of moving packages around the world at lightning speed, is confronting some of the greatest threats to the company he founded.

"Global trade is slowing and tariff fights have companies rethinking supply chains. A key partner, the U.S. Postal Service, is struggling. Amazon has morphed from a customer into a competitor.

"The threats have sapped FedEx’s finances at a time when the Memphis-based company is racing to adjust to modern delivery demands. Most of the growth in shipments is coming from e-commerce orders, which increasingly need to travel from a warehouse to a nearby home, not long distances overnight."

The story makes the point that there likely are no easy answers for FedEx, which, it could be argued, has a system built for another time. It decided to divorce itself from Amazon, which always was a costly and demanding customer, when that company started building out its own delivery infrastructure … but that means it is trying to succeed in the e-commerce business without doing business with the biggest e-commerce company. The separation of its Ground and Express businesses is seen by some as being a potential inhibitor tio success. And some analysts suggest that FedEx has been slow to recognize the structural changes that were taking place at retail that were inevitably going to hurt its revenue and profits.
KC's View:
These folks are all a lot smarter than me, so it is not like I can come up with the solution to FedEx's problems. But I can tell you this - the scenario as described by the Journal is one that faces even the most innovative businesses. You have to keep innovating, or you risk obsolescence.

Even FedEx, which, it can be argued, is one of the world's most innovative business models.