As we are all aware, the COVID-19 pandemic has swiftly shut down large swaths of the US economy. In fact, as I am writing this, over 150 million US residents are currently under a “stay at home” directive. Only businesses considered “essential” are being allowed to operate. While this is obviously very disruptive to the overall economy, there is a silver lining. FedEx is bucking this trend.
Given that the Federal government considers FedEx an essential service, business has been booming. With a significant shift in shopping moving online as customers remain at home, we have been seeing substantial week on week increases as we continue to progress through this pandemic. While business closers are certainly a headwind, home delivery stops are up significantly. For example, for our own operations this past weekend (March 21st-22nd) we saw a 36% increase in deliveries compared to the prior weekend. That’s massive!
Bottom-line, we believe there is upside risk to our 20% volume growth expectation for 2020. Our growth expectations have been based on the following 3 factors:
- Increasing e-commerce volume (only 18% of all retail sales currently online)
- Injection of Smartpost volumes into the Ground network
- The addition of FedEx Express volumes into the Ground network
With the impact of people staying at home, we firmly believe that e-commerce volumes , and thus overall growth, will be substantially higher given the requirements of people staying at home.
If you have thought about selling your FedEx routes, this might be an opportune time as these businesses will be very attractive to investors looking for recession proof companies to acquire. Give us a call at 303.997.0796 or email at info@blackironadvises.com today to discuss how we can help you maximize value in a sales process.