Home » Stocks » FedEx Black Swan Scenario $FDX, $UPS, $DPSGY, $KHNGY, $ROYMY, $OIL, $UNG, $USO

FedEx Black Swan Scenario $FDX, $UPS, $DPSGY, $KHNGY, $ROYMY, $OIL, $UNG, $USO

FedEx is about to release earnings. Ponder the Black Swan paddling gracefully just over there.

FedEx is essentially an airline that moves packages and not people. Most airlines are beset with high capital costs and poor operating performance. FedEx has a very expensive fleet which it must maintain, refurbish and replenish to avoid obsolescence. Boeing and Airbus must have a dedicated marketing team just working on the FedEx relationship.

FedEx also has the poor operating performance beat because the parcels must move whereas people do not have to travel as often and demand more price concessions.

FedEx as most airlines is inversely correlated to the price of oil. Jets and trucks all consume hundreds of thousands of gallons daily. This FedEx Achilles heel. yes they are efficient. Yes they can scan parcels multiple times along route. Yes the driver/delivery men are well spoken and courteous. But they cannot control the price of fuel. They can buy more energy-efficient modes of transport but they cannot hedge against rising energy prices. Yes there is a fuel surcharge but it has pricing elasticity problems. Not everything can be passed through.

FedEx should be investing in Tesla and anything that is green energy. They want to move away from carbon.

On balance they are controlled by carbon pricing and have not other plans.

Bad very bad.

George Gutowski writes from a caveat emptor perspective.

Advertisements