FedEx Expands To Europe, Investors Take Notice
Logistics firms like FedEx Corporation (NYSE: FDX) and United Parcel Service, Inc. (NYSE: UPS) have been under fire in recent weeks as e-commerce firms like Amazon.com, Inc. (NASDAQ: AMZN) vow to create their own logistics services and cut shipping companies out of the growing online market. However, in an effort to grow its revenue and increase its presence around the world, FedEx recently acquired Dutch competitor TNT Express.
The acquisition has been approved by European regulators, meaning that the two logistics firms have the green light to proceed. By combining TNT and FedEx, the new company will be able to cut down on costs by consolidating shipments and cutting out duplicate road delivery routes, something that will likely increase the shipping company’s margins. By adding TNT to its umbrella, FedEx will gain 22 percent of Europe’s express delivery market, just 3 percent less than rival UPS.
Time To Invest?
While questions about FedEx’s staying power if retailers create their own shipping companies remain, some investors are bullish on FedEx’s future prospects. Not only is the company gaining traction in Europe, but it already has a sizable presence in Asia. FedEx has been working to cut costs on its Asia deliveries while increasing efficiency and continuing to meet the market’s demand. Not only has the firm reduced the number of US to Asia flights it operates, but FedEx has also begun purchasing cargo space on passenger planes to carry some of its shipments. The firm is also working to improve delivery times in the US by investing in technology and automating much of its business. The company’s efforts to speed up delivery times has been paying off FedEx can offer faster deliveries than UPS on 30 percent of its routes. This has helped the company continuously gain marketshare from UPS over the past 16 years.
2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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