00:00FedEx reporting results a little while earlier with the parcel carrier higher by about 2.5% in after-hours trading.
00:06Now, the earnings dropping at a time of heightened competition with Uber and DoorDash taking aim at retail delivery.
00:12Our next guest says that this poses a conundrum for UPS and FedEx of whether they should retreat from low-margin residential e-commerce delivery or meet it head-on.
00:22Joining us now is Bloomberg Opinion columnist Thomas Black.
00:25So, I'll ask you that same question.
00:28I mean, has your answer changed in the 30 minutes or so since we've gotten these results?
00:35I think it's been backed up a bit.
00:37We saw FedEx, especially on the parcel side, increase revenue.
00:41And a lot of that was on what they call yield or higher prices.
00:44So, it's clear that they're going after price and not so much volume.
00:49So, after price.
00:51And is this good to the idea of, I guess, a stronger B2B business, but the idea of just higher value items?
00:57And if so, Tom, where exactly, where was that business before?
01:00Because I always thought that's what they always trafficked in.
01:04Yeah, they're moving into things like healthcare where you have a lot of cold chain movements which are higher priced.
01:11They also want to do more business packages and large oversized packages, which is something that they specialize in.
01:19And it's something that UPS has kind of backed away from.
01:22So, it's helped FedEx in that sense.
01:25Yeah, FedEx versus UPS is a really interesting chart because, you know, we know that FedEx investors, as a previous guest phrased it, have had to be patient over the past couple of years.
01:35But you take a look at how they're performing in 2025, actually slightly higher year to date.
01:40I can't say the same for UPS underwater by about 28 percent, or rather, sorry, that's an old figure, down by 13 percent year to date.
01:49So, a real divergence is forming between these two.
01:52And I wonder, you know, whether you think that UPS is able to gain a little bit more traction here.
01:57The difficulty is that UPS has a lot of its costs locked in, and especially around the union wages, which are the highest in the industry.
02:08So, it doesn't have as much flexibility as FedEx does to cut costs.
02:12And FedEx has undergone a very transformative period for itself.
02:18It's since Raj Subramaniam became CEO, they've cut costs, but they've taken out about $4 billion of annual costs, and they're still going.
02:28So, the network hasn't shown its potential yet because the market is so weak.
02:34But a lot of analysts think that once you start to get the demand to come back online, margins will pop.
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