FedEx Management Needs to Go, Continues to Stumble

Nate Skiver and I were talking yesterday, it's not clear why we go on FedEx investor earnings calls anymore.

Let's look at a few talking points from the FY Q3 2022 call yesterday:

- softer volume last quarter than expected due to Omicron.

- calendar year 2022 US economic forecasts being revised down

- planning on mid to high single digits growth for next 3-4 years.

The future looks like:

1 - driving improved european results (TNT acquisition)

2 - improve "collaboration and efficiency"

3 - digital innovation.

First, there is no strategy here, just taglines. Europe is the only notable play, and it will make them more efficient, but that's an acquisition. If FedEx has decided it can't take share natively, then it is already dead.

Fred Smith decided long ago to fight the battle in the news media and the courts over Amazon, rather than in the marketplace. To the detriment of his formerly amazing company -- because that drives out all the innovators.

Listening to UPS management and in particular CEO Carol Tome', and this cast of characters named Smith at FedEx (seriously?!) is night and day.

UPS is giving you specific strategies and innovations they are introducing every call. Then demonstrating how much upside they have to continue to drive in their financial performance based on their innovation pipeline. That is how a modern company runs.

The killer question in the call was simple. "FedEx used to be better at UPS from profitability and growth, now it's worse. What is the plan?"

Answer was a non-answer. Because the only answer to the question is to look at the scoreboard. If you have to ask the question, you already know the answer.

My take?

Where is the innovation?

Where is the plan to take share? From who?

They are not taking share from Amazon and UPS is simply executing and innovating faster - growing faster, and getting more profitable at the same time.

FedEx needs to be combined with another company at this point. I don't see a lot of great options, except another transportation company. I have seen people mention Walmart. With respect, that's the dumbest thing I ever heard. No retailer makes any sense.

FedEx is becoming more irrelevant in the US which is why they are hoping Europe is the lifeline. If it's not, the company will soon be sold for parts.

Worse, on the call they said they are going after direct brand relationships, and not platforms. At the same time, they are supposedly laser-focused on SMB. Those two things make no sense together. SMBs rely on platforms because things are integrated, easy, and they can access rates and services that let them punch above their weight.