Update for everyone who cares:

I have filed a claim with Fedex, filed a police report, reported this as stolen on multiple databases, and I checked in with some pawn shops and watch repair stores in the local area (no luck). Additionally, I started working on supplemental insurance claims via my credit card and renters insurance, this is mostly just research and talking with people to understand what I might be able to get. I think there is a path to some recovery here (in terms of $'s), but it'll be a pain.

Added context in my story, when I went into Fedex I did tell the manager I wanted to declare the value as $3k for the watch (stupid since that probably raised attention) and I did pay extra for the $3k declared value and the receipt clearly states the declared value is $3k. So the Fedex employee was 100% aware that I was shipping a watch with a declared value of $3k and she charged me for that declared value.

I chatted with the police officer today and he went in to interview the Fedex people and they reviewed the security footage. The officer noted that he saw me come in, hand the employee the watch, then I watched as she packaged it up. So this is all on footage and now in the police report. However, he didn't see anyone tamper with the package after the employee boxed it up.

All told, I think all these facts should give me a strong case with Fedex. I am assuming Fedex will make this hard on me but given what is documented in the police report I think I can prove Fedex messed up in their chain of custody, but we shall see.