BrownCafe
Who delivers Amazon orders? Increasingly, it’s plainclothes contractors with few labor protections, driving their own cars, competing for shifts on the company’s own Uber-like platform. Though it’s deployed in dozens of cities and associated with one of the world’s biggest companies, government agencies and customers alike are nearly oblivious to the program’s existence.
The tightest U.S. labor market this century is putting pressure on margins for freight haulers and warehouse operators as they bid for hundreds of thousands of workers to move packages during the peak holiday period.
The tightest U.S. labor market this century is putting pressure on margins for freight haulers and warehouse operators as they bid for hundreds of thousands of workers to move packages during the peak holiday period.
UPS is using messaging app Snapchat (SNAP.N) to find workers in competitive markets like Portland, Oregon, and Chicago, UPS global recruitment strategies director Paul Tanguay said.
UPS is also seeking 2,700 rural drivers to deliver packages using their own cars, expanding a 2016 pilot program, Tanguay said.
Analyst Matt Reustle and his team write that the market is overlooking growing global trade, and the positive impact it will have on air freight and logistics companies, especially FedEx and UPS. While Reustle acknowledges that Amazon is a threat, and margins are a concern, he thinks investors are overly focused on these worries, and not realizing how great a factor the acceleration of international shipping will be.
On Tuesday, the United States Postal Service released its fourth-quarter and full-year results, and Bernstein’s David Vernon and his team write that the situation appears “to be going from bad to worse,” which supports their thesis on publicly traded delivery companies.
Vernon writes that the USPS’s results show that the cost of final mile delivery is increasing, which means that pricing for residential services should improve–a benefit the more productive networks of FedEx (FDX) and United Parcel Service (UPS). He reiterated an Outperform rating and $132 price target on UPS and a Market Perform rating and $212 price target on FedEx.