It is either madness or genius. Either way, it illustrates how businesses view shipping after two years of pandemic and one year of supply chain disruptions.

Quiet’s business enables American Eagle (ticker: AEO) and other Quiet customers to better manage store inventory and e-commerce execution, both of which are critical to retail success. “People who don’t have sophisticated and efficient capabilities for shipping… can’t compete,” says Michael Rempell, COO of American Eagle.

American Eagle’s measures appear necessary as shopping becomes more complex after the pandemic, especially for smaller retailers trying to compete with giants like

Amazon
.

com (AMZN). Shoppers want to buy online, in-store, and online for in-store pickup, and there are a number of ways they want to return their purchases as well. If a store doesn’t have the brand or style they want, shoppers will simply buy elsewhere or go online. As a result, customers, not retailers, are in charge of the supply chain, which has made it necessary to rethink logistics operations. “What it does is transform the supply chain from a simple cost center … into a revenue generator,” says Mark Okerstrom, president of digital truck broker Convoy.

Whether Eagle stock, which gained 32% in 2021, is a buy is a tough question. The shipping strategy sounds smart, but Eagle investors still need to focus on 20-year-old fashion trends.

CH Robinson in the world

(CHRW) and

XPO Logistics

(XPO) – big truck brokers with smart technology – might be better bets for some investors. This pair is trading 16 times and 17 times the estimated earnings in 2022, respectively, cheaper than 20 times the S&P 500. This is a sign that investors are not expecting much growth from these companies just yet.

Giants of maritime transport

United parcel service

(UPS) and

FedEx

(FDX) can also benefit from the focus of small retailers on logistics. UPS, for its part, increased its shipping volumes with small and midsize businesses by nearly 11% year-over-year in the third quarter, a sign that the company is more committed to providing outsourced solutions to small businesses. shippers who need to compete with bigger rivals.

FedEx, meanwhile, completed its acquisition of ShopRunner, which connects brands and merchants with online shoppers, in December 2020. As part of FedEx, ShopRunner can improve customer inventory management, reduce delivery times and facilitate returns.

The valuations of shipping giants do not reflect the investments they have made in the logistics technology necessary for their growth. UPS stock, which gained 25% in 2021, is trading at around 17 times earnings, even as Wall Street projects average annual earnings growth of 7% over the next three years. FedEx, after falling 5.6% this year, is even cheaper. FedEx shares are trading at 11 times estimated earnings for 2022, although Wall Street projects average annual earnings growth of 11% for the next three years.

The valuation multiples lower than the maritime franchise market seem to indicate a lack of confidence in their capacity for growth. American Eagle’s acquisition of Quiet Logistics suggests otherwise.

Write to Al Root at [email protected]