[PLUG-TALK] Why does FedEx deliver so slowly?

John Jason Jordan johnxj at gmx.com
Mon Mar 22 17:37:38 UTC 2021


On Mon, 22 Mar 2021 01:55:52 -0700
Keith Lofstrom <keithl at kl-ic.com> dijo:

>Why does FedEx deliver so slowly?
>
>So that mourning FedEx stockholders can walk behind the trucks.

Actually FedEx stock is selling these days for twice what it was selling
for a year ago. Here is the full story, with insights as to why their
service sucks.

FedEx used to have a contract with Amazon, which made them comfortably
profitable. But Amazon decided to go to their own delivery service, at
least in the cities. FedEx lost most of their Amazon business, and
their stock price plunged.

Now we have to look at how businesses are run. Corporations are
controlled by the board of directors, and you don't get a seat on the
board unless you are a major stockholder. In other words, when FedEx
stock prices went down each member of the board of directors saw their
net worth sink by many millions. Needless to say, this made an unhappy
board. And the result was that the board took action to make sure that
the stock would regain its value.

Lots has been written about how stock prices fluctuate, but the bottom
line is that it depends on profit. The more profit you make, the more
investors will pay for your stock.

Profit is what is left after expenses of operation, so you can increase
profit by increasing income or, just as effectively, by reducing
expenses. Because of competition raising prices was not generally an
option, so the only solution was to reduce costs. And to reduce costs
meant parking most of their delivery trucks and laying off the drivers,
resulting in shabby service.

Of course, giving customers lousy service will eventually cost them
revenue as they lose customers. But in the meantime, their profits
are up and their stock price is soaring.

You can see this story over and over again in American big business.



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