I am noticing 2 trends lately:
- Many companies are closing more and more of their retail stores and focusing more and more on online sales.
- Me (myself, and I) and all the other people I know are spending more money on online purchases than on offline purchases.
This can only mean one thing for the shipping business: a very bright future. You see, every single time you order something online, shipping companies make money, even if the shipping is free (free shipping doesn’t mean that nobody pays for the shipping, it just means that you won’t pay for the shipping, but the seller will – they should probably rename “free shipping” to “seller pays shipping”, because it’s technically not free).
This is not a theory – it is practical and it is reflecting in the stock price of each and every public shipping company. For example, FedEx (NYSE:FDX) is up 158% over the past 5 years, UPS (NYSE:UPS) is up 116% over the same period. DHL is private, but I’m sure they are experiencing the same growth.
So how come semi-governmental courier companies such as Canada Post are losing money?
I think the answer is obvious – mismanagement. The problem with these companies is that they always think, and rightly so, that they have a safety net (which is the government and the public) that won’t let them fall, so they keep on spending on things that they don’t need (technologies, etc…), promising wages they cannot pay, committing to perks they cannot afford, and hiring people that they don’t need. The government will always back them in case something happens to them. I don’t think there’s a silver bullet to fix the issues, so, I guess we all have to live with it! Either that or we sell them to the private sector, and then, a simple lettermail from Montreal to Toronto will cost in the near of $5 to send!
Going back to the main topic, I think the online business will need a decade or so to mature and to experience low growth, which means that for the next 10 years, business will be great as usual for all those courier companies! It’s a great idea to pick one right now and invest some serious money in it! But hey, don’t take my word, do your research first!
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