Overview of FedEx

FedEx is a leading global provider of logistic services. Founded in 1971, the company furnishes customers and business across the globe with a comprehensive portfolio that comprise of e-commerce, transportation and business services (FedEx, 2019). The company provides incorporated business services through companies that are competing conjointly and managed collaboratively under the FedEx brand.
Types of services that the company provides
FedEx is a shipping company that offers a wide range of logistics to more than 80 countries across the globe. In retrospect, FedEx operates under distinct platforms to serve its customers. For instance, the Federal Express Corporation is an express premium courier service for businesses and individuals. They provide express shipping services at a relatively short time mostly between 3- 5 working days.
The FedEx Ground is much cheaper than the express option. It offers delivery services to the USA and Canada and has in place money-back guarantees for customer complaints. FedEx Ground is operated by independent owners who own trucks and control delivery routes and territories.
FedEx Freight is involved in the shipping of small packages and full load truckloads. The FedEx Custom Critical provides delivery services to expedited surface and critical freight. This option is by far the most expensive and flexible service option out of the above, and it’s also the fastest providing door to door safe delivery mostly within one day or freight delivery for valuable and items that are considered hazardous. Lastly, the FedEx trade network provides services that are meant to simplify the shipping operations for its customers. It offers flexible end to end services such as cargo distribution, marketing, technical support, brokerage, and trade facilitation. This service mainly targets business that is involved in transporting huge cargoes.
As seen, FedEx is a service provider and not a manufacturing or producer. Therefore, FedEx does not buy products for resale. Conceivably then the company does not have any inventory. Indeed, the company’s balance sheet does not have stocks.
Analysis of the company’s annual 2019 report shows that the company’s sales have been increasing over the years; in 2017 the revenues were $ 60,319, in 2018 $ 65,450, and $69,693 in 2019 representing a 6% and 8% increase.It is difficult to ascertain the relationship between inventories and revenues in our case. However, the section below highlights the changes in account receivables

2019 2018 2017 2016
Receivables 9,116 8,481 7,599 7,252
Sales 69,693 65,450 $60,319 50,365
Changes in Receivables 7% 10% 5%
Changes in Sales 6% 8% 17%

From this we can conclude that an increase in debtors corresponds to an increase in revenues. However, this is inconclusive as changes in sales could be driven by multiple other factors other than trade debtors. For example, acquisitions and mergers could lead to improved sales. Also, improvements and expansion of facilities within the various segments could have necessitated an increase in sales. The bottom line argument in our case is that there is indeed a positive relationship between a company’s receivables and revenues in that the more the customers, the more the company sales. The caution is that this should not be considered in isolation as sales could also be driven by several other factors including sales commissions and advertisements.
Risks the company faces
The scope of operations and activities means that FedEx is exposed to risks that have a material impact on its future. To begin with, the company is exposed to a competitive retail environment which can affect the company’s margins. Competition from competitors such as DHL, UPS can affect the business, upcoming small scale domestic players within the various countries can also affect the business.FedEx counters competitive risks by building customers loyalty and trust by delivering seamless and customized services for the customers. FedEx also offers differentiated and innovative services.
Technological Developments and Disruptions are two-sided facilitating expansion of business and also building up competition by creating new business models such that consumers can understand and manage logistics within different platforms. Fed Ex has in place a team that actively monitors technological innovation through training and participation and exploring innovation in new business models such as the “Critical Inventory Logistics, a supply chain service that is designed to enable customers in high-tech industries – such as telecommunication, semiconductor, and biomedical — to more efficiently manage high value and time critical inventory by utilizing FedEx Kinko’s stores (FedEx, 2019).”
FedEx has broad exposure to changes in regulatory policies including taxation, pricing, retail operations, royalties, and so on. Changes in regulatory policy may affect the financial outcomes and even the viability of existing and proposed projects. FedEx manages exposure to extensive industrial regulatory risks by taking an active role in leading debates and engaging with policymakers in all governmental levels by participating in public forums, industrial associations and think tanks (FedEx, 2019).
FedEx is also exposed to regulations of the energy and environment decarbornization, which includes the need to invest in high carbon-intensive assets and also participate in increased control of emission of greenhouse gases. FedEx strategy to transition to a carbon-constrained future provides for the integration of energy initiatives.
FedEx is also exposed to financial risks in the debt instruments, interest payments and foreign exchange differences across the countries it operates in. Movements in interest rates and fluctuations in foreign exchange could lead to a decrease in USD revenues or increased payments with respect to the dollar. Fed Ex manages foreign exchange and interest rate changes by utilizing a combination of derivatives and physical positions.
Although the company’s annual statements show that the company is financially flexible, this flexibility can further be affected if the company fails to appropriately manage its liquidity especially in the event where there is no available market when refinancing is required.
There is also the risk of creditors falling to pay their debts. Some counterparts may be unable to fulfill their obligations. FedEx has in place risk assessments and also credit support to manage credit risk.
Economic trends and anti-trade measures affect FedEx especially because the transportation industry is cyclonical and susceptible to macroeconomic measurements such as changing demographics and income distribution within the population, such that the company’s demand is pegged on macro trends that accompany demographics. The state of the overall global economy also affects FedEx trade because it’s an international player. Aspects such as world trade policies, taxes, government relationships, bilateral trade agreements among countries, anti-trade and protect measures by other countries may affect FedEx operations. Unfortunately, there are no measures to protect against such macroeconomic trends.
Altogether, FedEx has fully disclosed the controls and procedures that are involved in the preparation of financial statement in alignment with the requirements from the Securities
Exchange Act. The full disclosure of the information is essential and to some extent gives the company a competitive advantage in attracting potential investors.
References
FedEx Annual Statements. (2019). 2019 10-K form. Retrieved from http://investors.fedex.com/financial-information/sec-filings/sec-filings-details/default.aspx?FilingId=13539736&cik=0001048911
FedEx Annual Statements. (2018). 2019 10-K form. Retrieved from http://investors.fedex.com/investor-home/default.aspx
FedEx Annual Statements. (2017). 2017 10-K form. Retrieved from http://investors.fedex.com/investor-home/default.aspx