Stock Stories FedEx (FDX) - Big Moat, Small Margins
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Jul 10, 2023 Uncover the fascinating journey of FedEx, from its revolutionary founding by Frederick Smith to its impact on the logistics industry. Dive into the intricate business model that prioritizes speed and efficiency. Explore the financials behind this giant, including key performance metrics and market positioning. It's a deep dive into how a big moat protects a company with small margins, making it an intriguing case study for investors and business enthusiasts alike!
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FedEx's Founding Story
- Frederick Smith started FedEx inspired by a Yale term paper idea about overnight delivery.
- Despite initial skepticism, he raised $91 million and launched operations in Memphis in 1973.
Vertical Integration Advantage
- FedEx owns its fleet of planes, unlike competitors relying on commercial airlines.
- This vertical integration allows better scheduling control and operational efficiency.
FedEx's Business Segments
- FedEx operates mainly through three segments: Express (air), Ground (small packages), and Freight (larger shipments).
- Express is the flagship segment covering 220 countries with nearly 700 aircraft, representing half of revenue.