FedEx’s Corp. executives expect to keep most of the shipping business the company picked up from rival United Parcel Service Inc. during that company’s labor negotiations this year, and they also believe FedEx could hold onto thousands of package deliveries following Yellow’s bankruptcy filing, according to BofA analysts.
The analysts, led by Ken Hoexter, said in a note dated Tuesday that the remarks by the executives were made during an investor lunch that same day. FedEx
FDX,
Hoexter said, gained around 400,000 packages a day out of the 1.2 million that UPS
UPS,
lost.
However, he noted: “This is in contrast to UPS’s commentary that it expects to win back a majority of its business, and is willing to pay customer penalties.”
Executives at FedEx also expect to retain around 5,000 shipments a day in extra less-than-truckload freight — generally, smaller shipments that only take up a portion of a trailer — following Yellow’s chapter 11 filing in August, the analysts said.
FedEx did not immediately respond to a request for comment.
The FedEx executives made the remarks after UPS reached an agreement with the Teamsters union in July, following the threat of a strike. FedEx in September said it had gained “upside” from the often contentious negotiations between UPS and the union, as well as from Yellow’s troubles.
As shipping demand remains soft, FedEx is trying to cut billions of dollars in costs by cutting flights and executive roles, closing offices and bumping prices higher. But its workers could end up getting more as a result of the UPS deal: The BofA analysts noted that FedEx anticipates “an increase in labor rates post the UPS Teamster contract, but has built an increase into its annual wage growth expectations.”
UPS last month said it expected costs related to the deal with the Teamsters to rise at a rate of 3.3% over the contract’s five-year lifespan. But the company said it “retains flexibility to implement technology to further drive productivity inside our buildings.”
Trucking company J.B. Hunt Transport Services Inc.
JBHT,
on Tuesday said it wasn’t yet out of the current freight “recession” that came after the pandemic package-delivery boom fizzled. But the company’s president, Shelley Simpson, said “we are seeing signs of things moving in a positive direction.”
Shares of FedEx were down 2.3% on Wednesday, while UPS fell 1.4%.
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