The advances of retailers like Walmart (WMT) , Amazon (AMZN) , and even Target (TGT) in managing their own express shipping efforts are much larger threats to FedEx's domestic revenue base than the headlines surrounding Huawei.
For reference, FedEx generates about 67% of its revenue from the United States and only about 6.7% from China. Clearly, the domestic operation is of utmost importance to the company's forward trajectory.
As such, a review of its relationships with retailers in the U.S. market is in order as more and more sellers opt for faster shipping options that can operate sans shipping partners like UPS (UPS) , DHL (DPSGY) , and, of course, FedEx.
Amazon is particularly threatening due to its burgeoning base of Prime members and already understood capabilities in logistics.
Those strengths recently gained more power amidst the expansion of its Delivery Service Partner program, in which it will now provide up to $10,000 to fund the costs for individuals to start up a package delivery business at a rapid pace.
Both Amazon and Walmart now have next-day shipping options and Walmart's even comes without any membership fees. The fact that major retailers can cut out courier services and actually expedite services to consumers makes FedEx's services somewhat superfluous.
Of course, the immediate pushback is that only stores with hulking scale like Walmart and Amazon could possibly integrate this type of program.
However, Target, one of the rare winners in the recent trend of retail earnings, might be showing a way to challenge that notion.
The company's acquisition of e-commerce fulfillment company Shipt for $550 million in 2017 has essentially supplanted its need for a shipping partner, and has actually increased engagement among its customers. The price for Shipt, which has been seemingly just as additive for Target as Jet.com was for Walmart, was about one-third of Walmart's blockbuster buyout as well.
"I think our decision years ago to put our stores at the center of our fulfillment strategy is paying off with accelerated growth," Target CEO Brian Cornell said. "Our store and supply chain team continue to roll out and scale up an interesting leading suite of digital fulfillment options. Our guests are responding enthusiastically, driving rapid growth of our same-day options, including Drive-Up, in-store pickup and Shipt."
It is worth noting that Target still does employ FedEx and actually is partnered with them for use of an autonomous delivery robot alongside retailers like Lowe's (LOW) .
However, given Target's ability to cash in without the help of a major logistics partner in core business segments, it would stand to reason that their strategy is one many retail executives could copy and streamline business for FedEx to only its necessities.
Additionally, in an important point of contrast to its peers, FedEx is not offered as a shipping option for red-hot e-commerce play Shopify (SHOP) .
"Shopify Shipping is available for orders shipped from fulfillment locations based in the United States (USPS, DHL Express, and UPS) and Canada (Canada Post)," a posting on Shopify's help center site indicates. FedEx is conspicuously absent from its guidelines, which could cut the company off from a sizable base of users needing courier services.
In summation, these underlying trends that are far closer to home than the concerns about Huawei dominating the headlines Tuesday are what should head any list of worries for FedEx investors.