Our goal is not to maximize margins in every segment every year
This is Fred Smith. Let me take that question on a broader front, because this is one of my hot buttons as you probably know. We don’t manage FedEx Corporation trying to maximize each segment margin each year. If we did that, we would never be able to take advantage of this broad portfolio in the cross-selling that’s available to us.
Millenials are not going to stop going to stores
“We know from research that the millennial generation, the largest generational cohort in American history is not going to stop going to stores. In fact, we had a wonderful presentation about just a couple of weeks ago at our Board Meeting. So, e-commerce is fantastic and its going to continue to grow and we intend to be a major player in that space. But as Mike just said, it’s not going to — in our opinion and in the research from very credible sources, going to eliminate retail. What it may do is change the character of retail.”
B2B is the backbone of FedEx network
remember of all retail e-commerce is now about 10%, growing fast, taking share, but it’s going to be a long time before retail is threatened. And B2B meaning the underpinnings of the business world medical production, automotive, and things like that that in the main is not going to be diverted to e-commerce anytime soon and that is the backbone of the FedEx networks.”
Not a lot that doesn’t concern us with the election
“I would say, we would have a hard time putting up a list of the things that don’t concern us giving the two candidates position, but obviously we’re concerned about the anti-trade rhetoric a lot of the anti-business positions and it’s very worrisome. But hopefully after the election cooler heads will prevail.”
Continue to see moderate growth in global economy
“On the economic front, we continue to see moderate growth in the global economy. Our U.S GDP forecast is 1.8% for calendar ’16, which is 40 basis points lower than our forecast last quarter, and we forecast 2.4% for calendar ’17, led by gains in consumer spending.”
Ecommerce would not be possible without our networks
“Now I’d like to take a few minutes to further discuss and address the growth of e-commerce which continues to outpace GDP growth both in the U.S and globally. E-commerce has become a [indiscernible] for consumers acquiring goods around the world, but the success of e-commerce continues to be dependent on transportation companies ability to reliably and quickly make residential deliveries around the world.
One of the most profitable e-commerce companies today
As we noted during our last conference call on earnings, more than 95% of e-commerce packages in the U.S are delivered by FedEx, UPS, and the United States Postal Service, with whom we have a strategic relationship to transport their priority mail. E-commerce would be impossible without these companies and our expansive networks. If you were to isolate the FedEx e-commerce business, it would become clear FedEx is one of the most profitable e-commerce companies in business today.”
Continue to get questions about Amazon
“One additional point as we continue to get questions concerning Amazon in the evolution of their transportation capabilities and needs. Amazon continues to be a valuable customer and they’re among the large e-tailers that we stay in close dialogue with throughout the year to understand their transportation needs as they continue to experience significant growth and generate demand for FedEx transportation.”