FedEx investors, focus on the long term trends
FedEx might be down big today over short-term economic concerns, but according to Asendia, $FDX has a bright future.
With e-commerce sales projected to grow by 50% by 2025, that means that FedEx will have a lot more demand for its parcel delivery services in the future.
Very interesting— I haven't heard of Asendia before, looks like they are a mail business that provides e-commerce parcel solutions for e-tailers selling internationally. (Apparently they own large postal services in France and Switzerland?)
So they definitely speak from experience in the industry when they give that 50% growth projection— however, I can't help but think that they have a lot to gain by encouraging businesses to sell their products cross-border. Their article ends in handbook on their e-commerce delivery solution.
So I wonder— where are they getting the 50% number from? The article mentions some trends like
• A burgeoning middle class in developing countries
• Improved infrastructure
• Internet connectivity
But they don't provide any data or other support for their growth projection.
There are also counter-trends that could lead to slowed e-commerce growth, like:
• Re-shoring of industrial manufacturing
• Prolonged war / Famine
• Sustained inflation (duties and taxes make international purchases uneconomical)
I'm bullish on e-commerce growth— so I'm mostly bringing this up to test my own understanding and assumptions of growth in this sector. If you have any thoughts to weigh in on all of this, would love to hear them 🤓
@nathanworden since Asendia was unclear about how they arrived at the 50% growth conclusion, I had to reconstruct it myself using other available information and find other sources that landed on similar conclusions.
Statista predicted that e-commerce growth will grow by 50% from $4.9T to $7.4T by 2025. https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/
Now for reconstruction. According to CBRE, it's estimated that US e-commerce's share of retail sales is between 11.8% and 17.2%. https://www.cbre.com/insights/articles/omnichannel-what-is-the-share-of-e-commerce-in-overall-retail-sales#:~:text=E%2DCommerce%20as%20a%20Share%20of%20Retail%20Sales&text=The%20first%20way%20is%20comparing,in%202021%20(Figure%202).
With a low share of retail share, one would assume that there would naturally be a lot more room of growth. As for international growth contributing to aggressive e-commerce growth, Asendia and other analysts assume that the e-commerce penetration rates in these lower income nations will catch up to the rates that developed nations have.
I hope my explanation helps. Please let me know if there are other areas you're confused about.
This article is like Cathy Wood’s $10,000 $TSLA projections.
Well yeah, of course they’d say that. They have a lot to gain by pushing that narrative.