Amazon.com Inc. (NASDAQ: AMZN) was supposed to steal some of FedEx Corp.’s (NYSE: FDX) business by launching a fleet of its own planes. Drones will replace FedEx trucks, but in the air, not on the streets. Emissions limitations also will make the delivery company cut down its truck fleets. It is only a matter of time.
The market has not bought any of the speculation about FedEx’s future. Its shares are up over 7% this year, and at $160 they trade just shy of their 52-week high of $169.
FedEx already has its share of competition, and still, the market likes it. The U.S. Postal System continues to fight for its life, at least as it is now, and it has armies of trucks and tens of thousands of offices. Post offices in many other countries have the same problem, and the same aggression as they fight back.
In addition, United Parcel Service Inc. (NYSE: UPS) matches FedEx across much of its network, and it will continue to do so.
FedEx still holds a number of advantages over almost any other means of distribution. For the most part, it is the least expensive alternative. It has the huge moat of the cost to create its infrastructure and logistics. Amazon’s chess move represents little more than a dream.
FedEx earnings come out next week. They will demonstrate, once again, how little FedEx has to fear from competition. The only real enemy it has is the world’s economy.
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