The U.S. State Department on Friday said it would push for foreign postal carriers to pay the U.S. Postal Service more to deliver small parcels within the United States, taking up a longtime complaint by Amazon.com, UPS and others who have called the current system unfair.
Category: Industry News
FedEx Corp said on Friday it would not charge customers extra fees for most packages delivered to homes during the peak holiday shopping season, except packages that are oversized, unauthorized or require additional handling.
However, rival United Parcel Service Inc said last year it would raise surcharges for most residential packages for the 2018 peak season.
The e-commerce giant threatens to disrupt many industries, but here’s what may be behind its latest move.
The announcement that Amazon.com is inviting budding entrepreneurs to become Amazon Delivery Service Partners as part of its crowdsourcing delivery model will naturally concern investors in United Parcel Service and FedEx Corporation. But is it really that big of a threat? In reality, it could turn out to be more of a help than a hindrance and stockholders in the package delivery giants should not be unduly worried. Here are three reasons why.
Shares of FedEx (FDX) are falling on Monday, while United Parcel Service (UPS) is rising, as UBS’s Thomas Wadewitz argues that investors should now buy the latter instead of the former.
Wadewitz upgraded UPS to Buy from Neutral and raised his price target by $4, to $125, while he downgraded FedEx to Neutral from Buy and lowered his price target to $256 from $283.
So what’s behind the call? For UPS, he writes that a combination of cost and productivity improvements, along with a supportive sales backdrop, could boost margins in its domestic package business, and fuel stronger operating income growth next year. “UPS has multiple cost-side drivers including its Transformation initiative and network investments while we believe that the new Teamsters agreement may also facilitate growth,” he writes.
Bernstein’s David Vernon checks in with logistics giants United Parcel Service (UPS) and FedEx (FDX) on Monday, writing that there’s reason to keep the faith about both stocks.
First, UPS: The company announced an agreement late last month with its Teamsters union, and while we have scant details on that ongoing negotiation, Vernon writes that we are getting more information about hybrid drivers, one of the bones of contention between the two parties. He believes that these new drivers will lower costs–not because they are cheaper, but because they are more flexible within UPS’s cost structure.
UPS and the Teamsters agreed to protect existing full-time package jobs and limit growth of hybrid drivers to 25% of the total number of full-time carriers, which Vernon writes is better than he hoped, and that Sunday delivery options are in the works for the future. He writes that the “added flexibility in the UPS cost structure from hybrid drivers should increase the flexibility with which UPS is able to accommodate future growth from e-commerce and lower the effective rate of wage growth at the margin.”