FedEx: Anytime, Anywhere - [Business Breakdowns, EP.135]

Today we are breaking down FedEx. FedEx has a more direct impact on the U.S. economy than 99.9% of U.S. businesses - an actual statistic from Dun & Bradstreet. It was a business started in 1973 by the famous Fred Smith, as his planes delivered 186 packages to 25 cities. Today, FedEx moves about 15 million packages a day, all over the world. To break down the business, I'm joined by Staley Cates, Vice Chairman of Southeastern Asset Management. We cover the business of FedEx, how this network operates, the integration of Express and Ground services, and its history and valuation relative to UPS. Please enjoy this breakdown of FedEx. Founders Podcast: #151 Frederick Smith (FedEx) For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- This episode is brought to you by Tegus, the modern research platform for leading investors. Stretch your research budget with flexible expert calls you can trust. At a fraction of the cost of traditional expert networks, Tegus customers pay only what an expert charges – with zero markups and no confusing call credits – netting an average 70% savings. Don’t want to conduct a full hour call? Tegus offers the ability to schedule 30-minutes, an offer you won’t find anywhere else. And they don’t stop there. With white-glove custom sourcing for every project and robust compliance measures, including a dedicated 50+ analyst team that vets every call transcript, Tegus ensures your privacy and protection. As the industry innovator for qualitative insights, Tegus helps you find the right experts you need at a quality and speed that can’t be matched. For a limited time, as a listener, you can trial Tegus for free by visiting tegus.co/patrick. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show Notes: (00:04:27) - First question - An overview of Staley’s relationship with FedEx (00:05:06) - How FedEx is doing as a business in general (00:06:46) - A look at the different segments of FedEx’s business (00:08:08) - The differences between FedEx’s express and ground services (00:09:51) - A brief history of Fred Smith, the founder of FedEx and the opportunity he saw in the market (00:14:03) - How eCommerce and other trends have affected FedEx over the years (00:18:36) - FedEx’s position on whether to battle UPS for Amazon’s shipping alternative option (00:20:25) - A look at the United States Postal Service and its role in the overall eCommerce system (00:21:39) - The reasons behind the upside in FedEx Ground margins (00:26:07) - A look at LTL margins when it comes to FedEx Express services (00:28:20) - Potential opportunities for FedEx moving forward (00:31:24) - The re-fleeting of FedEx planes and other potential areas in FedEx’s business that may require capital expenditures (00:33:19) - The challenges FedEx faced when integrating the acquisition of TNT (00:36:04) - Bringing together FedEx’s different businesses to get an overview of the entire organization (00:38:34) - Wage inflation and how that will affect FedEx’s margin profile overall (00:42:56) - The potential for FedEx to compete with Amazon more directly (00:45:42) - FedEx’s current stock price and its potential (00:50:29) - FedEx’s use of railroads and its expansion over the past two decades (00:52:54) - An overview of the risks FedEx could face in the future (00:54:19) - The lessons learned from studying FedEx